GST Full Book Yogesh Verma Classes PDF

CA/CS/CMA Intermediate Goods & Services Tax Notes by CA Yogesh Verma
Goods & Services Tax Notes

Applicable For Year 2019
For B.Com/CA/CS/CMA – Intermediate
1st Edition
About the Author –

Yogesh Verma is a member of the ICAI and graduate from
India’s premiere undergraduate college – SRCC, DU
With the aim to provide quality education at affordable price
he has started Learnzup.com (Online platform for commerce
Students)
Prior to entering into teaching industry – he has

worked in KPMG, Royal Bank of Scotland, Nomura,
RSM and Luthra & Luthra.
Yogesh Verma
Founder – Learnzup.com
He has taught more than 1000 students freely on You-tube since Nov-16 (For May
17, Nov 17, May 18, Nov 18 attempt) and more than 10000 students have benefitted
in some form or the other through his You-Tube channel – Yogesh Verma Classes.
For CA Intermediate Taxation Video Lectures – Visit Learnzup.com (Free account

creation and free study group facility for students to interact and ask questions)
Disclaimer – While every effort has been made to provide quality content to the students,
though there might be some areas where correction is required. Students are requested to contact
the author in case there are any amendments required in this book.
Copyright notice - There are some sections which are taken from study material of ICAI – for
such content copyright goes to their respective owner. No part of this book can be reproduced
without prior permission of the author.
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Index
Sr. No. Particulars Page No.
1 Introduction 3
2 Value of supply 14
3 Time of supply 19
4 Exemptions 25
5 Reverse Charge 35
6 Composition Scheme 37
7 Input Tax Credit 41
8 Registration 54
9 Tax Invoice & E-way Bill 64
10 Supply 75
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Chapter 1 Introduction
Tax is a charge levied by government to meet public expenditure on highways, defence, hospital,
education etc.
Types of taxes
1) Direct Tax – Charged on person and its burden cannot be shifted on others i.e. if govt. levy
tax on Mr A then Mr A has to pay tax from his own pocket. It is also progressive in nature
i.e. high tax rate for people having higher income. E.g. of Direct tax - Income Tax
We have discussed income tax act in separate batch – kindly refer the same.
2) Indirect Tax – Charged on goods & services and its burden can be shifted on others. If
Govt. levy tax @ 10% on supply of goods worth 10,000 by Mr A then Mr A will recover the
tax from his customer (10,000 + 10% i.e. 1,000) and will deposit tax INR 1,000 to the govt.
hence its burden will fall on the final customer. E.g. of indirect tax GST and Custom duty
It should be noted that indirect taxes are ultimately borne by final customer whether rich or
poor therefore it has wider tax base and contribute more than 50% of revenue to the govt.
It is regressive in nature i.e. same tax rate for all
Another feature of indirect tax is that it increases the prices of commodity/services and
leads to inflation.
Position Before GST
GST was introduced in 2017 with the aim to consolidate and simplify the indirect taxes into one
simple tax i.e. GST (One nation One tax)
Earlier there were many indirect taxes such as Excise duty (levied on manufacturing), Value added
tax (VAT on intra state sale), Central sales tax (CST on interstate sale), service tax (on supply of
services), entertainment tax, etc.
*Intra state supply means supply within same state
*Interstate supply means from one state to another
Let us understand the position before GST with the help of an example:
Mr A manufactured component of Air conditioner @ cost of 5000, added 1000 as his profits, total
6000. Now wants to sell the same to Mr B – so on manufacturing, excise duty was payable @12.5%
and on sale VAT or CST was levied.
Particulars Amount (INR)

Assessable value (cost + profit) 6000
Excise duty payable to central govt. 750
@12.5%
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Sale price 6750

VAT @ 5% 338
Invoice Amount 7088
Note that first excise duty is levied and then on whole amount VAT is charged that means VAT is
charged on Assessable value & on excise duty (tax on tax), this as lead to double taxation.
What is input tax credit
In above example Mr B purchased a component of AC to manufacture an air conditioner.
Now Mr B paid 6000 for component and 750 Excise duty, 338 VAT – The tax paid on raw material
will be allowed to be adjusted from the tax collected on sale of air conditioner (finished goods of
Mr B). This concept is called taking input tax credit i.e. taking credit of tax paid on inputs/raw
materials.
E.g. Mr B incurred 1000 additional cost and added 1000 profit to make total value as 8000.
Particulars Amount
(INR)
Assessable value (cost + profit) excluding excise duty and VAT 8000
because that can be adjusted from output tax liability
Excise duty payable to central govt. @12.5% 1000
Sale price 9000
VAT @ 5% 450
Invoice Amount 9450
Mr B has paid 750 excise duty and 338 VAT to Mr A – Mr A will deposit the same to the respective
governments. Now Mr B collected 1000 excise duty and 450 VAT from his customer – however he
will pay as follows:
Particulars Amount
(INR)
Excise duty on final product 1000
Less: ED on raw material paid (750)
ED to be paid to central govt. by Mr B 250
Output VAT on finished goods 450
Less: Input VAT on raw material paid (338)
VAT Payable to state govt. by Mr B 112
INR 750 on excise duty and 338 on VAT – is called input tax credit.
In this way government has collected tax on value added by each party i.e. Total excise duty to
central govt. 750 + 250 = 1000
Total VAT to state govt. 112 + 338 = 450
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Note that in this example tax paid was allowed to be adjusted but if it was inter-state sale by Mr A
to Mr B then instead of VAT, central sales tax would be levied and CST paid cannot be adjusted
from VAT payable – this is called cascading effect. The tax which cannot be adjusted will become
part of the cost of raw material.
Also, there are other limitations in older indirect tax system but since now it is replaced by GST
hence we will only focus on current tax system.
Introduction of GST
Introduction of GST required 101st constitutional amendment done in 2016 to integrate excise
duty, service tax, VAT and other state specific taxes.
Following Articles of our constitution amended are as follows:
Article 246A(1) – Parliament will have power to make laws on GST imposed by union and state
legislatures will have power to make laws with respect to GST imposed by states. This means dual
GST (Centre - CGST & State – SGST, Union Territory - UTGST)
Article 264A (2) – For interstate supply –Parliament has rights to make laws (i.e. Integrated GST -
IGST)
Article 254 – In case of inconsistency between laws made by Parliament and Laws made by state
legislature – law made by parliament shall prevail.
Article 366 (12A) – Alcoholic liquor for human consumption kept outside the purview of GST
hence state excise and VAT will apply (as its consumption depends on state to state hence state
will have power to levy old indirect taxes)
Article 279A(5) – On following products GST will be levied when notified by GST Council –
Natural gas, high speed diesel, motor spirit/petrol, Aviation turbine fuel, petroleum crude. (Same
written under section 9(2) of CGST Act)
Excise duty will be charged by central government and state taxes will be charged by state
government on above items.
* On Tobacco and tobacco products excise duty will also be levied in addition to GST.
Other Articles of our constitution states the following:
Article 265 – Gives power to the govt. to levy tax – Tax can be levied only by an authority of law
(i.e. by making an act).
Article 246 – Both Central and State govt. have authority to make laws.
Article 245 – Parliament make law applicable for whole or any part of the India and State govt.
make law applicable for whole or any part of the state.
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What is GST Council - Article 279A
A body constituted by President of India which has 33 members - Union finance minister is one of
the member as well as chairman of the council. Other members include finance ministers of
respective State/ Union territory.
Main function of this council is to make recommendations to the Union and State on important
issues like tax rates, exemption, threshold limit, dispute resolution etc.
For any decision to be taken at-least 75% voting should be done in its favour. Central govt. has
33.33% weightage in total votes and state govt. together has 66.67% weightage of total votes
casted. Further Union govt. has veto power as no decision can be taken without consent of union
government.
What is Goods And Services Network – GSTN
It is a non-profit organisation (section 8 company – Private Limited). It was formed to provide IT

infrastructure to the govt. relating to GST (like facilitation of registration, filing of return, matching
tax payment details with bank network, providing MIS reports to central & state govt.,
computation and settlement of IGST among central and state government, running matching
engine at backend to match input tax credit).
Electronic portal www.gst.gov.in is managed by GSTN
As per decision of GST council – GSTN will now be converted into a govt. co.
Goods and Services Tax (Compensation to states) Act, 2017
Imagine that all indirect taxes merged into one tax i.e. GST – earlier VAT and some other indirect
taxes were received directly by state, that is why now states have a fear of losing revenue on
implementation of GST (Tax rate on one item same in the whole country).
To ensure stable revenue to all the states – GST (Compensation to state) Act, 2017 was passed
where central govt. ensured to compensate loss in revenue which individual states have earned in
the year 2015-16, also central govt. ensured 14% growth rate in revenue to states for 5 years.
To compensate the states – on some commodities GST compensation cess is also imposed – these
are Cigarettes, Cigar, Hookah, Pan masala, Tobacco products, aerated water, Lignite, Coal, motor
vehicle. Rate of compensation cess – 1% on small cars, 3% on mid-sized cars and 22% on luxury
cars
Motor cycle > 350cc – 3% cess
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The proceeds of cess will be utilized to compensate states which demand payment of
compensation. The unutilised fund at the end of 5th year will be distributed as follows – 50% to
central govt. and rest 50% distributed among all States / Union territories in the ratio of their
revenue.
Benefits of GST
1) Creating India as a unified national market

2) Mitigating ill effects of cascading
3) Elimination of multiple taxes and double taxation
4) Boost to make in India
5) Widening the tax base and improving tax payers compliance
Let’s Understand GST
GST is a destination based tax applicable to whole India (Section 1) from 1st July 2017. The
state/union territory where consumption of goods & services takes place will get the revenue of
GST.
India has adopted dual GST structure i.e. GST is imposed by both centre and state government.
Central govt. levy CGST on value (as per Section 15) of intra state supply @ rate not exceeding
20% paid by taxable person (Section 9(1) of CGST Act, 2017) and State govt. levy SGST on intra
state supply
Section 9 is the charging section for CGST
There are 2 UT with state legislature i.e. Delhi & Pondicherry, so these two UT would charge SGST
on intra state supply.
Other Union Territories – Andaman & Nicobar Islands, Lakshadweep, Dadar & Nagar Haveli,
Daman & Diu and Chandigarh. Union Territories will charge UTGST on intra territory supply.
IGST would be levied on value (as per section 15) of Inter State Supply @ rates decided by
GST Council – collected by CG from taxable person (Section 5 of IGST Act, 2017) – IGST rate is
CGST + SGST. On imported goods IGST will be levied
Section 5 is the charging section of IGST Act, 2017 – Max rate can be 40%
* To levy GST – separate acts are made – CGST Act 2017, UTGST Act 2017, and SGST Act made by
respective states.
*Intra state supply means supply within same state or same union territory
Intra state supply of goods (Section 8(1) of CGST Act, 2017)

The following supply of goods are not treated as intra state SS of goods
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1) SS of goods to/by SEZ unit or SEZ developer

2) Goods imported into territory of India until they cross custom frontiers of India (i.e. custom
station)
* SEZ stands for special economic zone which aims to export goods – so supply to SEZ is treated as
export and therefore it will not be regarded as intrastate supply.
Intra state supply of services (Section 8(2) – CGST Act, 2017)

SS of services to/by SEZ unit or SEZ developer – not intra state
Interstate supply means supply between two different states or two different union
territories or a state and a union territory.
IGST Act, 2017

Section 7(1) tells about Inter State Supply of Goods
Section 7(2) tells about import of goods into territory of India shall be treated as interstate supply
of goods.
Section 7(3) tells about Inter State Supply of Services
Section 7(4) tells about import of services into territory of India shall be treated as interstate supply
of services.
In case of import an import duty (countervailing duty – CVD) which is equal to IGST is imposed
Section 7(5) – Following will always be treated as Interstate supply of goods or service
a) Export
b) Supply to SEZ Unit/SEZ developer or Supply by SEZ Unit / SEZ developer (deemed export/
import)
c) Supply of goods/services in taxable territory – which is not intra state supply and is not
covered elsewhere in this section
IGST is collected by Central Govt. and is apportioned between centre and state.
Example Mr A (Rohini - Delhi) sells goods worth INR 20,000 to Mr B (Laxmi Nagar – Delhi). Mr B
then adds 5000 profit and sells the same to Mr C (Karol Bagh – Delhi). GST rate is 18% i.e. CGST
9%, SGST 9%.
Supply of goods by Mr A to Mr B – Intra-State Supply
Particulars Amount
Value of supply of goods/services 20000
Add: CGST @ 9% 1800
Add: SGST @ 9% 1800
Total Price Charged from Mr B 23600
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Mr A will now deposit the CGST to central govt. and SGST collected to state govt. – please note
Delhi is a Union territory with state legislature hence SGST is charged.
Now Supply of goods by Mr B to Mr C – Intra State Supply
Particulars Amount
Value of supply of goods/services (including his 25000
profit)
Add: CGST @ 9% 2250
Add: SGST @ 9% 2250
Total Price Charged from Mr C 29500
Now Mr B will deposit the tax as follows:
Particulars Amount
CGST Payable 2250
Less: Credit of CGST paid on input (1800)
CGST Payable to Central govt. 450
Particulars Amount
SGST Payable 2250
Less: Credit of SGST paid on input (1800)
SGST Payable to State govt. 450
Revenue earned by Govt.
Central Govt. – 1800 + 450 = 2250
State Govt. – 1800 + 450 = 2250
Assume in above example Mr B is located in Pune
Then goods sold by A to B – Inter State Supply
Particulars Amount
Value of supply of goods/services 20000
Add: IGST @ 18% 3600
Total Price Charged from Mr B 23600
Mr A will deposit IGST collected to central govt.
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In which order to adjust Input Tax Credit
SGST Credit CGST Credit IGST Credit
SGST payable CGST payable IGST payable

IGST payable IGST payable CGST payable
SGST payable
This means SGST credit cannot be used pay CGST and CGST credit cannot be used to pay
SGST
Assume Mr C is located in Mumbai Intra State Supply
Particulars Amount
Value of supply of goods/services (including his 25000
profit)
Add: CGST @ 9% 2250
Add: SGST @ 9% 2250
Total Price Charged from Mr C 29500
Mr B will pay CGST = 2250 (Collected on sale) – 2250 (IGST credit) = 0

SGST = 2250 (Collected on sale) – 1350 (IGST credit remaining) = 900 to state government
How much money Central and state government will get –

Remember CGST is the revenue to central government
SGST is the revenue to state government
IGST is also collected by Central govt. and then it will be apportioned between central & state
govt.
If supplier use SGST credit to pay IGST then it is a loss to central govt. – IGST central govt. ko milta
hai but seller ne apna SGST credit use kiya and central govt. ko IGST utne se kam mila.
Therefore
State govt. will transfer the SGST credit utilised for IGST to the central govt.
Similarly if supplier uses IGST credit to pay SGST then state government is at loss and therefore in
such case central govt. will transfer the amount of IGST utilised for SGST to state govt.
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In the above example

Central government will get IGST 3600 – 1350 (IGST used for SGST transferred to state govt.) =
2250
State government will get SGST 900 + 1350 (Received from central govt. since supplier IGST credit
to adjust SGST and state govt. incurred a loss in revenue) = 2250
Important note – If location of supplier and place of supply are in same state (Intra state
transaction) then CGST + SGST/UTGST is levied
If Location of supplier and place of supply are in different state (Inter-state transaction) then IGST
is levied.
Important note – Self supply also subject to GST

If an entity has 2 branches (one in Pune and another in Kota) in different states and it transfers
stock from one branch to another then also IGST will be levied. However if goods are transferred
between own branches/warehouse in same state then GST not levied if entity has taken only one
registration in that state.
IGST is also levied on import i.e. on import custom duty plus IGST is levied.
Examples – Assume GST Rate 18% and calculate GST to be charged on invoice
Sr. No. Particulars Value of Supply

1 Supply from Delhi to Daman & Diu 50000
2 Supply from Mumbai to Pune 40000
3 Supply from Punjab to Delhi 25000
4 Supply in Chandigarh 10000
Solution
Sr. No. Particulars CGST SGST UTGST IGST
1 Interstate supply @ 18% 9000
2 Intrastate supply @ 9% CGST, 9% 3600 3600
SGST
3 Interstate supply @ 18% 4500
4 Intra-State (Union Territory 900 900
without state legislature) @ 9%
CGST, 9% UTGST
GST Rates (Not in syllabus)

For Goods
Page | 11
Nil – Milk, Butter milk, salt, human blood, printed books, Meat, Fish, Jute, Silk, Rakhi, Rupee
note/coins sold to RBI, fresh fruits, coffee beans, live tree plant animals
0.1% - Supply of goods to merchant exporter for export
0.25% - Rough diamonds, rough precious or semi-precious stones

3% - Gold, silver, processed diamond, platinum, pearls, gems, imitation jewelry
5% - Preserved vegetables, Concentrated milk, chutney powder, tea, coffee, edible oil, E-waste,
sugar, roti, khakhra, unbranded namkeen, fruits in frozen state.
12% - Butter, cheese, ghee dry fruit in packed form, fruit juices, Ayurvedic medicine, tooth powder,
LED lamps, Cell phones, Apparel > 1000 per piece, spectacles frame.
18% - Refined sugar, Pasta, Cornflakes, Pastries, Soups, Ice creams, Chocolates, Perfumes, Fans,
Mineral water, wall paper, musical instruments, projectors, telescope, microscope, water heaters,
washing machine, refrigerators
28% - Pan masala, aerated water, Tobacco product, Cements, Paints, Tyres , AC, Motor vehicles,
Motor Cycles, Tiles, Aircraft for personal use, Video games, Revolver.
Lottery– organized by state government – rate is 12%

Lottery – organized by private personal authorized by state govt. – rate is 28%
For Services –
General rate is 18% on banking insurance, courier, postal, gas & water distribution,
legal/accounting services, telecommunication servicesm R&D, service related to software.
5% - Selling of space for advertisement in print media, Services of job worker (printing of
newspaper, textile yarns, cut & polished diamonds/precious metals, printing of books, tailoring.
5% (Input tax credit of only services allowed) – Transport of passengers by AC contract carriage
or stage carriage, radio taxi, rail in AC/first class, air in economy class, any motor vehicle
Transport of goods by rail or vessel
Leasing of aircrafts by a scheduled airlines
5% (Input tax credit not available) – Services of goods transport agency (GTA) in relation to
transportation of goods; foods & drinks in restaurant, counter sale of foods items
12% - Accommodation in hotels, inns, guest houses, clubs, campsites tariff > = 1000 but < 2500
per room per day.
Transport of passengers by air in other than economy class
Temporary / Permanent Transfer of Intellectual property rights
Page | 12
18% - Outdoor catering services, supply of food with convention services, pandal, shamiana or
hotel
Accommodation in hotel, guest houses, clubs per day cost of room >= 2500 but < 5000
Admission to amusement parks, exhibitions of films – cost < = 100
28% - Accommodation in hotels including 5 star – cost of room > = 5000

Admission to entertainment events, casino, race course, sporting events (IPL), gambling
Page | 13
Chapter 2 Value of Supply

Section 15 of CGST Act, 2017| Section 20 of IGST Act, 2017 | Section 21 of UTGST Act, 2017
Condition – If the supplier and recipient are not related & price is the sole consideration then
Transaction value (TV) = Value of supply
Transaction value means price actually paid/payable for the goods or services.
Meaning of related person [Explanation to section 15]
Value of Supply includes the following Section 15(2)
a) Any taxes, duties, cesses, fees, charge levied under any law other than GST
b) Any amount supplier is liable to pay in relation to such supply but which is paid by recipient
and not included in the price actually paid/payable
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c) Incidental expenses such as commission and packing, charged by supplier to the recipient
of supply
Any other amount charged for anything done by supplier in respect of the supply of
goods/services or both before or at the time of such supply.
d) Interest or late fee or penalty actually taken by supplier for delayed payment.
e) Subsidies linked to price excluding subsidies received from central/state government.
Subsidy received reduces the price of the product but subsidy received from other than
state/central government should be included in the price for calculating value of supply.
E.g. Mr A sold a solar panel for INR 50000, after adjusting the subsidy of 20000 received from
charitable trust and 16000 received from central government.
Here transaction value will be 50000 + 20000 = 70000 and GST will be charged on TV.
Ex-Factory sale means sale is complete once goods moved out of the factory and it is buyer’s duty
to take the goods at his premise. TV doesn’t include freight charges
FOR Sale – Free on road i.e. seller bears the charges for transportation, transit insurance etc.
In case of FOR sale transaction value includes freight and transit insurance charges.
Value of supply does not include Section 15(3)
1) Discount allowed before or at the time of supply – if such discount is shown separately in
the invoice
2) Discount allowed after the supply provided it is allowed as per the terms of an agreement
existing at the time of supply and Input tax credit on discount portion has been reversed by
the recipient.
3) Deposit not included in TV – however if such deposit is used to pay the consideration of
goods/supply purchased then that portion will become part of TV.
E.g. on sale of >= 1000 units in a year, supplier would allow 10% discount as per the agreement.
Price is 100 per unit.
Mr. A purchased 600 units earlier at full price then next month purchased 500 units – as per the
agreement Mr. A will get discount on 600 units (Earlier he paid 600*100 = 60000 + 18% GST i.e.
10800 – GST paid on input can be adjusted for payment of output GST by A – i.e. taking Input tax
credit) now Mr. A will get 10% discount i.e. 6000 = so GST on 6000 i.e. 1080 needs to be reversed
by Mr. A.
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Example – A Ltd .has provided following particulars relating to goods sold by it to B Ltd.

List price of the goods (exclusive of taxes and discounts) 50000
Tax levied by Municipal Authority on the sale of such goods 5000
CGST and SGST chargeable on the goods 10440
Packing charges (not included in price above) 1000
A Ltd. received 2000 as a subsidy from a NGO on sale of such goods. The price of 50,000 of the
goods is after considering such subsidy. A Ltd. offers 2% discount on the list price of the goods
which is recorded in the invoice for the goods.
Determine the value of taxable supply made by A Ltd. (Study Material)
Solution Computation of value of taxable supply

List price of the goods (exclusive of taxes and discounts) 50000
Tax levied by Municipal Authority on the sale of such goods [Includible in the 5000
value as per section 15(2)(a)]
CGST and SGST chargeable on the goods [Not includible in the value as per Nil
section 15(2)(a)]
Packing charges [Includible in the value as per section 15(2)(c)] 1000
Subsidy received from a non-Government body [Since subsidy is received from a 2000
non-Government body, the same is included in the value in terms of section
15(2)(e)]
Total 58000
Less: Discount @ 2% on 50,000 [Since discount is known at the time of supply, it (1000)
is deductible from the value in terms of section 15(3)(a)]
Value of taxable supply 57000
Example ABC Advertisers conceptualised and designed the advertising campaign for a new
product launched by New Moon Pvt Ltd. for a consideration of 5,00,000. ABC Advertisers owed
20,000 to one of its vendors in relation to the advertising service provided by it to New Moon Pvt
Ltd. Such liability of ABC Advertisers was discharged by New Moon Pvt Ltd. New Moon Pvt Ltd.
delayed the payment of consideration and thus, paid 15,000 as interest. Assume the rate of CGST
rate 10% and SGST rate 10%
Determine the value of taxable supply made by ABC Advertisers.
Solution

Service charges 500000
Payment made by New Moon Pvt. Ltd to vendor of ABC Advertisers 20000
[Liability of the supplier being discharged by the recipient, is includible in
the value in terms of section 15(2)(b)]
Interest for delay in payment of consideration [Includible in the value in 15000
Page | 16
terms of section 15(2)(d)

Value of taxable supply 535000
CGST @ 10% 53500

SGST @ 10% 53500
Assume if in question value is given inclusive of GST – 500000 and GST rate is 10%
X + 10% of X = 500000
1.1x = 500000
X = 500000/1.1
X = 454545 approx. (excluding GST)
This is called reverse calculation to be done if value is inclusive of GST
Example – Customer asked the supplier to test the quality of goods before delivery. Supplier did
the same and charged testing fee of INR 10000 to the customer – this will be included in the
taxable value since testing is done before delivery.
Example – Compute value of taxable supply if contracted value is 10 Lakhs and this includes the
following:

Cost of packing 15000
Cost of design & drawing charges 5000
Cost of preventive packing on customer’s request 7000
Pre-installation consultancy charges 50000
Inspection charges 8000
Trade discount 2000
Additional points:
1) Freight charges of 25,000 paid by recipient on behalf of supplier

2) 30000 subsidy received from charitable trust adjusted in value
3) 20000 subsidy received form central government adjusted in value
Solution
Computation of taxable value of supply of goods

Contracted value of supply 1000000
Add items to be included as per section 15(2)
Page | 17
Cost of packing – Note 1 Nil

Cost of design & drawings – Note 2 Nil
Cost of preventive packing on customer’s request – Note 1 Nil
Pre installation consultancy charges – Note 2 Nil
Inspection Charges – Note 2 Nil
Trade Discount – Note 3 Nil
Freight charges Note 4 25000
Subsidy from charitable trust Note 5 30000
Total Taxable Value of Goods 1055000
Note 1 Cost of packing and preventive packing on customer’s request shall be included in
determining the value of taxable supply. As it is already included in the contracted value hence no
further adjustment is required
Note 2 Amount charged from recipient for anything done by supplier before or at the time of
delivery of goods shall be included in the value of taxable supply. As it is already included in the
contracted value hence no further adjustment is required
Note 3 Value of supply doesn’t include any discount which is given before or at the time of supply
if such discount is duly recorded in the invoice issued for such supply. As it is already deducted
hence no adjustment is made.
Note 4 Any amount that supplier is liable to pay in relation to supply but has been incurred by
recipient should be included in the value of supply. Since freight charges incurred by recipient on
behalf of supplier shall form part of taxable value.
Note 5 Value of supply include subsidies directly in relation to price excluding subsidy received
from central government or state government.
Page | 18
Chapter 3 Time of Supply under GST
Liability to pay GST arise at the time of supply (TOS)
Under CGST Act – Section 12 & 13 talks about time of supply for goods and services respectively.
Same provisions are written under section 20 of the IGST act.
Section 12(2) Time of Supply of Goods
Earlier of:
1) Date of issue of invoice/ last date when invoice should be issued u/s 31
2) Date of receiving the payment
Date of receiving the payment means - Entering the payment in books of account or crediting of
payment in bank account, whichever is earlier.
In case where advance is received for goods- All registered person (except composition
suppliers) are exempted from paying GST at the time of receipt of advance in relation to supply of
goods. The entire GST shall be payable only when the invoice for the supply of such goods is
issued or ought to have been issued.
Time limit for issue of tax invoice in case of supply of goods – A registered person supplying
taxable goods shall issue tax invoice for supply of goods on or before:
a) Removal of goods (where the supply involves movement of goods)/delivery of

goods/making goods available to recipient. Section 31(1)
b) In case of continuous supply of goods – the invoice should be issued on or before the
issuance of periodical statement / receipt of periodical payment Section 31(4)
Example – A machine has to be supplied at site. It is done by sourcing various components from
vendors and assembling the machine at site. The details of the various events are:
17th September Purchase order with advance of INR 50,000 is received for goods worth
INR 12 lakh and entry duly made in the seller’s books of account
th
20 October The machine is assembled, tested at site, and accepted by buyer
rd
23 October Invoice raised
4th November Balance payment of INR 11,50,000 received
Determine the time of supplies in the above scenario for the purpose of payment of tax.
Page | 19
Solution
Time of supply is earlier of receiving payment or issue of invoice/last date when invoice has to be
issued.
The time of supply of goods for the entire amount of 12 Lakhs is 20th October which is the date on
which the goods were made available to the recipient as per section 31(1)(b), and the invoice
should have been issued on this date [Section 12(2)(a)].
1) Time limit for issuance of invoice for supply of services – Section 31(2) read with rule 47
the Invoice needs to be issued either:
a) Before provision of service
b) Within 30 days (45 days in case of insurance co./banking co/ financial institutions
including NBFCs) from the date of supply of service
In case of continuous supply of service Section 31(5)
Invoice needs to be issued either:

a) On or before the due date of payment
b) If due date not ascertainable - On or before the time when supplier of service receives
the payment
c) If payment is linked to completion of an event – on or before the completion of such
event.
In case of cessation (End) of supply of service before completion of supply – The invoice to
the extent of supply made before such cessation should be issued at the time when supply ceases.
Section 31(6)
Section 13(2) Time of supply of services
Where invoice is issued within prescribed time - Earlier of Date of issue of invoice or date of
receiving the payment
Where invoice is not issued within time – Earlier of Date of provision of service or date of
receiving the payment
If above event s unascertainable – The date on which recipient shows the receipt of service in his
books of accounts
Example - Determine the time of supply from the following particulars:
6th May Booking of convention hall, sum agreed 15000, advance of 3000
received
Page | 20
15th September Function held in convention hall

27th October Invoice issued for 15000, indicating balance of 12000 payable
3rd November Balance payment of 12000 received
Solution
As per section 31(2) read with rule 47 of CGST Rules, the tax invoice is to be issued within 30
days of supply of service. In the given case, the invoice is not issued within the prescribed time
limit. As per section 13(2)(b), in a case where the invoice is not issued within the prescribed
time, the time of supply of service is the date of provision of service or receipt of payment,
whichever is earlier.
Therefore, the time of supply of service to the extent of 3,000 is 6th May as the date of payment
of 3000 is earlier than the date of provision of service. The time of supply of service to the
extent of the balance 12,000 is 15th September which is the date of provision of service.
In case excess amount is received up to INR 1000 (for goods or services) – E.g. Goods supplied
for 10000, amount received 10900 – so 900 advance received can be adjusted against next invoice
---- GST can be paid on excess amount received at the time when invoice for such excess amount
is issued.
Page | 21
Time of Supply under reverse charge
Reverse charge is a mechanism where GST is payable by recipient to the government.
Time of Supply of goods Section 12(3)
Earlier of
1) Date of receipt of goods

2) Date of payment as entered in the books of account of the recipient or the date on which
the payment is debited to his bank account, whichever is earlier
3) 31st day from the date of issue of invoice
Where the above events are not ascertainable, the time of supply shall be the date of entry in
the books of account of the recipient of supply
Example
Determine the time of supply from the given information.
May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days
from the date of issuance of invoice elapse on June 3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment
Solution
May 12 will be the time of supply, being the earliest of the three stipulated dates namely
Time of supply of services Section 13(3)
1) Date of payment as entered in the books of account of the recipient or the date on which
the payment is debited to his bank account, whichever is earlier
2) 61st day from the date of issue of invoice
Where the above events are not ascertainable, the time of supply shall be the date of entry in
the books of account of the recipient of supply.
Example - Determine the time of supply from the given information. (Assuming that service being
supplied is taxable under reverse charge)
May 4 The supplier of service issues invoice for service provided. There is a dispute
about amount payable, and payment is delayed.
August 21 Payment made to the supplier of service
Page | 22
Solution
Here, July 4 will be the time of supply, being the earlier of the two stipulated dates namely, date of
payment and date immediately following 60 days since issue of invoice.
Time of supply in case of vouchers Section 12(4) for Goods & Section 13(4) for Services
As commonly understood, vouchers are instruments that can be exchanged as payment for goods
or services of the designated value.
If the supply is identifiable at the point at which voucher is issued – The date of issuance of
the voucher
If the supply is not identifiable at the point at which voucher is issued – The date of
redemption of voucher
E.g. A Limited sells food coupons to a company, which gives these to its employees as part of the
agreed perquisites. The coupons can be redeemed for purchase of any item of food /provisions in
the outlets that are part of the program.
As the supply against which the coupon will be redeemed is not known on the date of the sale
of the coupon, the time of supply of the coupon will be the date on which the employee
redeems it against food / provision items of his choice.
E.g. With each purchase of a large pizza during the Diwali week from Best Pizza, one can buy a
voucher for 20 which will be redeemable till 5 Jan for a small pizza. As the supply against which the
voucher will be redeemed is known on the date of the sale, the time of supply is the date of issue
of the voucher.
Residual Case Section 12(5) for Goods and Section 13(5) for Services
If the situation is not covered by any of the provisions discussed above
1) Where a periodical return is required to be filed - Due date of filing such return
2) Other case - Date of payment of tax
Enhancement in value on account of interest/late fee etc. for delayed payment of

consideration Section 12(6) for Goods and Section 13(6) for Services
Addition in value by way of interest, late fee/penalty for delayed payment of consideration
TOS = Date on which the supplier receives such addition in value
Import of services between associated enterprises
Page | 23
In the case of service received from an associated enterprise located outside India
The time of supply will be earlier of:
1) The date of payment for the service

2) The date of entry of the service in the books of account of the recipient
Chapter 4 Exemptions under GST (Important)
Page | 24
Section 2(47) CGST Act – Exempt Supply means supply of any goods or services or both :
1) Which attracts nil rate of tax
2) Which may be wholly exempt from tax u/s 11 of CGST or Sec 6 of IGST Act
3) Non Taxable Supply – E.g. Petroleum
Further exemption can be absolute exemption (must be availed by all without any condition) or
conditional exemption (exemption available subject to fulfillment to some conditions – can be
availed at the option of the registered person).
Kindly note that GST paid on input used for providing exempt supply will not be allowed as ITC.
Goods exempt from GST Section 11 of CGST Act, 2017/ Section 6 of IGST Act, 2017
Some examples – Fresh fruits & vegetables; Food grain such as wheat etc. ; Unbranded rice, soya
beans, khadi, Salts, Hearing aids , plastic bangles, Indian Flag, Live fish, fresh milk, curd, Lassi, Eggs,
Newspaper, journal Puja Samagri.
Services exempt from GST Section 11 of CGST Act and Sec 6 of IGST Act
Health care services

– By clinical establishment, an authorized medical practitioner or paramedics
(Trained healthcare professionals - physiotherapist/nursing staff/lab assistant etc.)
Reiki is not recognized system of medicine (recognized system means

Allopathy/Ayurveda/Homeopathy/Naturopathy/Yoga/Siddha/Unani)
Health care services does not include hair transplant or cosmetic or plastic surgery except when it
is done to correct injury, trauma, developmental abnormalities, congenital defects
Services provided by way of transportation of a patient in an ambulance
Services provided by the cord blood bank by way of preservation of stem cells or any other
services in relation to such preservation
Services by a veterinary clinic in relation of health care of animals or birds
Services provided by operators of the common bio medical waste treatment facility to a clinical
establishment by way of treatment of disposal of bio medical waste or processes incidental thereto
Educational Services
1) Provided by an educational institution (till 12th, Education as part of curriculum recognized by
law including approved vocational course) to its students, faculty and staff
Page | 25
2) To an educational institution (till 12th), by way of –

a. Transportation of students, faculty and staff
b. Catering (food) + mid-day meal
c. Security & cleaning/housekeeping
d. Services in relation to admission or to conduct examination
Supply of online education journal or periodicals by educational institute (other than educational
institute providing education upto 12th or vocational course)
Services of public library – lending books, publications, knowledge enhancing content

Services provided by an educational institution by way of conduct of entrance examination against
consideration in the form of entrance fee.
Services by IIM to their students by way of following educational programmes except executive
development programme.
2 year PGDM, Fellow programme in management, 5 year integrated programme in management
Services provided by – National skill development corporation (NSDC); Sector skill council (SSC);
Assessment agency of NSDC or SSC; training partner approved by NSDC or SSC.
Services of assessing bodies empanelled centrally by Directorate general of training; ministry of

skill development and entrepreneurship by way of assessment under skill development initiative
(SDI) scheme.
Services provided by training providers under Deen Dayal Upadhyaya Grameen Kaushalya Yojna
under ministry of rural development – by way of offering skill or vocational training courses.
Training or coaching in recreational activities relating to

1) Arts or culture
2) Sports by charitable entities (registered under 12AA of income tax act)
Legal Services provided by Firm of advocates or an individual as an advocate

to –
1) An advocate/firm of advocates providing legal service
2) Any person other than business entity
3) Business entity turnover < =20L (<= 10L for special category states) in preceding FY
4) CG, SG, UT, LA, Govt. auth., Govt. entity.
Note – If Senior advocate/arbitral tribunal is providing legal service then point no. 2, 3 & 4 are
valid only.
Page | 26
Agricultural Activities
Services relating to cultivation of plants or agricultural produce by way of—
(a) Agricultural operations directly related to production of any agricultural produce including
cultivation, harvesting, threshing, plant protection or testing;
(b) Supply of farm labour
(c) Processes carried out at an agricultural farm including tending, pruning, cutting, harvesting,
drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk
packaging and such like operations which do not alter the essential characteristics of agricultural
produce but make it only marketable for the primary market;
(d) Renting or leasing of agro machinery or vacant land with or without a structure;
(e) Loading, unloading, packing, storage or warehousing of agricultural produce;
(f) Agricultural extension services;
(g) Services by any Agricultural Produce Marketing Committee or Board or services provided by a
commission agent for sale or purchase of agricultural produce.
Rearing of animals except horses ------ for food, fiber, fuels, raw material etc.
Carrying out an intermediate production process as job work in relation to cultivation of plants e.g.
job work on paddy to make rice
Services by way of:

1) Loading, unloading, packing, storage or warehousing of rice.
2) pre- conditioning, precooling, ripening, waxing, retail packing, labeling of fruits and
vegetables which do not change or alter the essential characteristics of the said fruits or
vegetables
3) Fumigation in a warehouse of agricultural produce.
4) Warehousing of minor forest produce (non-timber forest produce)
Service by the government (CG/SG/UT/LA) by way of
1) Issuance of passport, visa, driving license, birth/death certificate,

2) Registration under any law, testing, calibration, safety check or certification relating to
protection or safety of workers, consumers or public at large, including fire license required
under any law.
Page | 27
Following services of the government are taxable --- services

1) By department of post (discussed in reverse charge) – Speed post, express parcel, life
insurance, agency services
2) In relation to aircraft/vessel,
3) Transport of goods or passengers
Services other than above upto 5000 in FY is exempt

Services other than above and renting of immovable property is exempt if provided to business
entities with turnover <=20L (10L for specified states)
Specified states -
Services by government to another government
Services to Government or services by government in relation to any function entrusted to

Panchayat/Municipality under Article 243W/243G (e.g. rural housing, drinking water, fire service,
rural electrification, animal husbandry etc.)
Services provided to government other than work contract service or where service includes
supply of goods.
Services supplied by CG/SG/UT to their undertaking or PSU by way of guaranteeing the loans
taken by such undertaking or PSU.
Services of tolerating non-performance of a contract for which consideration in the form of fines
or liquidated damages is payable to CG/SG/UT/LA.
Services by way of assignment of right to use natural resources to individual farmer relating to
agriculture.
Services – providing information under RTI
Deputing officers after hours or on holidays for inspection or container stuffing or duties in
relation to import or export cargo on payment of merchant overtime charges.
Services supplied by SG to Excess Royalty Collection Contractor (ERCC) by way of assigning

the right to collect royalty on behalf of the SG on mineral dispatched by the mineral lease
holders.
Transportation of passenger by
1) Stage carriage (Non AC)
2) Contract carriage (Non AC + Not for tourism)
3) Railways (Non AC and Non First class)
4) Metro, mono rail, tramway
5) Inland waterways
6) Public transport (Not for tourism) in vessel between places in
India
7) Metered cabs or auto rickshaw + E-rickshaw
Page | 28
8) Airways starting or ending Arunachal Pradesh, Assam, Manipur,

Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Bagdogra (west Bengal)
9) Service to CG by transporting passenger by air embarking from or terminating at a regional
connectivity scheme airport.
10) Hiring of motor vehicle (> 12 passengers) to the state transport undertaking.
Taxable – Transport through radio taxi, ropeway, cable car, aerial tramway.
Transportation of goods
Services by way of transportation of goods through GTA/Courier agency/railway/ship/aircraft –
Taxable
Service of Goods Transported by aircraft/vessel from outside India to custom port is exempt
Transportation of goods by road or inland waterways is exempt
Transportation by rail/vessel/GTA within India exempt for following goods:

1) Relief material – for victim of disasters, calamities, accidents or mishap
2) Defense or military equipment
3) Newspaper or magazines registered with registrar of newspaper
4) Railway equipment or material
5) Agricultural produce
6) Milk, salt and food grains including flour, pulses and rice
7) Organic manure
GTA providing transportation up to INR 1500 for full vehicle or INR 750 per consignment where
goods of many persons are carried
Services provided by GTA to unregistered person other than factory, society, coop society, body
corporate, firm, AOP, casual taxable person.
Charitable activities by entity registered under 12AA of Income Tax Act
Charitable activities means –

1) Care/Counseling of ill persons or person with severe physical/mental disability
2) Advancement of religion, spirituality or yoga
3) Advancement of educational / skill programs or skill development of orphanage,
physically/mentally abused/ prisoners/ person > 65 years in rural area
4) Preservation of environment/forest/wildlife
Religious Activities
Services by a person by way of –
a) Conduct of any religious ceremony
b) Renting of precincts of a religious place meant for general public, owned or managed by an
entity registered as a charitable or religious trust
Except renting of rooms where charges >= 1000/day;
Renting of premises, community hall, kalian Mandapam or open area, renting of shops or
other business space if charges >= 10000/day
Services by way of transfer of a going concern as a whole or an independent part

Services of Construction, repair and maintenance of buildings under govt. schemes
Page | 29
Services provided by pure labour contracts – of construction, erection, commissioning, installation,

completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any
other original works under housing for all/PM Awas Yojna.
Pure labour contracts for single residential unit (otherwise than as a part of a residential complex).
Services provided by Fair price shops to CG/SG/UT by way of sale of wheat, rice and food
grains etc. under public distribution system against consideration in the form of commission or
margin.
Renting of residential dwelling for use as residence
Services by hotel, inn, guest house, club -- For residential or lodging purposes having declared
tariff of a unit below 1000 per day (declared tariff includes all charges for services provided in
accommodation) including discounts.
E.g. price 1200/day and 50% discount then price is > 1000 hence GST applicable however afterdisc
ount price is less than 1000/day
Services by way of access to a road or bridge on payment of toll charges/annuity
Transmission or distribution of electricity by an electricity transmission or distribution utility

Services supplied by electricity distribution utilities by way of construction, erection,
commissioning, or installation of infrastructure for extending electricity distribution network up to
the tube well of the farmer or agriculturist use.
Services by RBI
Services received by RBI from outside India in relation to management of foreign exchange
services
Services provided by RBI – Always exempt
Bank deposit/loans where consideration is by way of interest/discount (not credit card

interest)
Purchase/sale of foreign currency between banks/authorized dealers
Service provided by bank/financial institution - Settlement of amount up to 2000 in a single
transaction transacted through credit/debit card or other payment card services.
Services by an artist by way of a performance in folk or classical art forms of music, dance, theatre
if consideration is <= 1.5L
If artist is working as brand ambassador then taxable
Services provided to recognized sports body by

1) Individual as a player, referee, umpire, coach, team manager for participation in a sporting event
organized by a recognized sports body
2) Other recognized sports body
Page | 30
Indian Recognized sports body: means -

(i) Indian Olympic Association;
(ii) Sports Authority of India;
(iii) A national sports federation recognized by the Ministry of Sports and Youth Affairs of the
Central Government, and its affiliate federations;
(iv) National sports promotion organization recognized by the Ministry of Sports and Youth Affairs
of the Central Government;
(v) The International Olympic Association or a federation recognized by the International Olympic
Association; or
(vi) A federation or a body which regulates a sport at international level and its affiliated
federations or bodies regulating a sport in India.
Sponsorship of sporting events organized -----

By a national sports federation or its affiliated federations where the participating teams or
individuals represent any district, state, zone or country
By Association of Indian Universities, Inter-university sports board, school games federation of
India, All India sports council for the deaf, Paralympic committee of India or Special Olympics
Bharat
By the central civil services cultural and sports board as part of national games, by the Indian
Olympic association or
Under the Panchayat Yuva Kreeda Aur Khel Abhiyan Scheme
Services by foreign diplomatic mission (High commission, Embassy, Consulates) to India.
Provided by FIFA or its subsidiaries for under U17 world cup is exempt
Services by way of right to admission to
1) Circus, dance theatrical performance including drama or ballet
2) Award function, concert, pageant, musical performance or any sporting event
3) Recognized sporting event or planetarium
Condition Ticket <=500 per person in all above in above 3 cases
4) FIFA U-17, admission to museum, protected monument national park, wildlife sanctuary, tiger
reserve or zoo
Services provided by an incubatee having turnover <=50L in current FY provided
T/o <= 50L in previous FY and 3 years not elapsed from date of entering into an agreement as an
incubate
Incubatee means an entrepreneur located in technology business incubator (TBI) and has entered
into agreement with the technology business incubator or science and technology
entrepreneurship (STEP) part to enable himself for innovative product
Services provided by STEP and TBI are also exempt
Import services - If taken by

1) Government
2) Individual for personal purpose
3) 12AA charitable trust
However OIDAR (Online Information Database Access and Retrieval services) are liable for GST
Page | 31
Supply of goods/services including import to unit in SEZ/ developer in SEZ
Services of an unincorporated body or Non-profit entity to its own members –

1) Activities of a trade union
2) Exempt activities
3) Services by housing society to its member (up to an amount of 7500 per month per
member) – if > 7500 then full amount GST
Below services provided to its members for consideration up to 1000 p.a. per member
Activities relating to welfare of industrial or agricultural labour or farmers;
Promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports,
education, social welfare, charitable activities and protection of environment
Services by way of public convenience such as provision for facilities of bathroom,

washrooms, urinal or toilets
Services by way of slaughtering of animals
Services by way of artificial insemination of livestock (other than horses)
Services by way of collecting/providing news by an independent Journalist, Press trust of India or

united news of India
Insurance Services
Life insurance business provided by the Army, Navy and air force to its members under the group
insurance scheme of the central government
Life insurance by way of annuity under national pension system
Life insurance – Janashree Bima Yojna, Aam Admi Bima Yojna, Varishta pension Bima Yojna, PM
Jeevan Jyoti Bima Yojna, PM Jan Dhan Yojna, PM Vaya Vandana Yojna.
Life micro insurance product as approved by IRDA upto cover of 2 Lakhs
General insurance – E.g. Hut insurance, cattle insurance PM Fasal Bima Yojna, , PM Suraksha Bima
Yojna, Crop insurance, insurance for tribal, Agricultiral Pumpset and failed well insurance, Group
personal accident policy for self employed women, Niramaya Health Insurance, Coconut Palm
insurance, Seed crop insurance, Janata Personal Accident policy and Gramin Accident Policy,
universal health insurance scheme
Reinsurance of life insurance and general insurance
Collection of contribution under Atal Pension Yojna/ Any scheme of state government
Services provided to CG/SG/UT under insurance scheme for which total premium is paid by
CG/SG/UT.
Services by ESIC to persons registered under ESIC act
Services provided by EPFO to persons governed by EPF act
Services provided by IRDA to insurers under IRDA of India act
Page | 32
Services provided by SEBI by protecting interest of investors in securities and to promote the
development of, and to regulate, the securities market.
Services provided by the GSTN to CG/SG/UT for implementation of GST
Services provided by the National center for cold chain development by way of cold chain
knowledge dissemination
Services by Coal Mines PF Organization to persons governed by CMPF and Misc. Act
Services by NPS (National Pension System) trust to its members against consideration in the form
of administrative fee
Services by way of licensing, registration and analysis or testing of food samples supplied by the
FASSAI to food business operators.
Services by business facilitator/ business correspondent to a banking company with respect to

accounts in its rural area branch or
Any person as an intermediary to a business facilitator or business correspondent with respect to
above services
Business facilitator/business correspondent to an insurance company in a rural area.
Services by intermediary of financial services located in a (multi services SEZ with international
financial services centre (IFSC) status) to a customer located outside India for international
financial services in currencies other than INR.
Services provided by specified organization for religious pilgrimage approved by govt. (Kumaon
Mandal Vikas Nigam Ltd, Govt. of Uttarakhand, Any undertaking in case of Kailash Mansarovar, Haj
Committee of India and State Haj Committees)
Services provided by Indian tour operator to foreign tourist in relation to a tour wholly conducted
outside India
Supply of services of transit cargo to Nepal and Bhutan
Supply of services by a Govt. entity to CG/SG/UT/LA or any person specified by govt. – for
consideration received in the form of grants
Services by an old age home run by CG/SG/12AA entity to its residents (>60 years) against
consideration upto 25000 p.m. per member (provided consideration is inclusive of all the charges
of boarding, lodging and maintenance)
Upfront amount (called premium, salami, cost, price, development charges or by any other name)
payable in respect of service by way of granting of long term lease of > = 30years of industrial
Page | 33
plots for development of infrastructure for financial business. The CG/SG/UT shall have >= 50% of
ownership in the entity directly or through an entity which is wholly owned by the CG/SG/UT.
Services of leasing of assets by Indian Railway Financial Corporation to Indian Railways.
Services by an organizer to any person in respect of business exhibition outside India
IGST exempt
Services supplied by an establishment of a person in India to any establishment of that person

outside India (place of supply is outside India), which are treated as establishments of distinct
persons.
Import of services by UN or a specified international org. for official use
Import of services for official purpose by foreign diplomatic mission or consular post in India or
diplomatic agents or career consular officers posted therein. (based on certificate issued by
ministry of external affairs, based on principle of reciprocity).
Page | 34
Chapter 5 Reverse Charge Mechanism
3 things to be considered - Service Provider, Service Receiver and Type of Service
Cases where service receiver needs to pay GST to government are covered under reverse charge
mechanism:
1) Supply from Non Taxable territory to taxable territory – IGST 18%, No reverse charge on
OIDAR service received by unregistered person.
2) Goods Transport Agency – to person (factory, society, co-operative society, registered

person under GST, body corporate, firm, AOP, casual taxable person) located in taxable
territory and liable to pay freight.
If GTA is unregistered or doesn’t charge GST then recipient liable to GST @ 5%
If recipient is unregistered then exempt from GST
If GTA charges GST under forward charge mechanism then GST @ 12%
3) Advocate providing representational services (before any court, tribunal, and authority) to
any business entity located in taxable territory.
4) Arbitral tribunal providing services to business entity located in taxable territory
5) Sponsorship services – Supplied by any person to body corporate/firm located in taxable
territory - @ 18%
6) Letting of immovable property by govt. or transport of goods/passengers by government
or services by department of posts (speed post, express parcel, life insurance, agency
services provided to a person other than CG/SG/UT/LA) – These services provided to a
business entity - 18% rate of GST
7) Services of director – to body corporate located in taxable territory
8) Insurance agents providing service to a person who is carrying on insurance business
located in taxable territory.
9) Recovery agents – providing services to banking company, financial institution, NBFC
located in taxable territory
10) Author or music composer, photographer, artist providing service (permitting use of
copyright material) to publisher, Music Company, producer located in taxable territory GST
12%.
11) Transport of goods by vessel from a place outside India up to custom station in India – IGST
5%
12) Services received by RBI from members of overseeing committee
13) Services by an individual Direct Selling Agent (DSAs) providing service to banking co,NBFC
located in taxable territory.
14) Registered person supplying to unregistered person – date not yet notified
15) Electronic commerce operator (ECO) – Aggregator – Transportation of passengers,
providing hotel/guest house
Page | 35
Situations Who is liable to pay GST

If ECO located in taxable territory ECO is liable to pay GST e.g. Ola
If ECO doesn’t have physical presence in taxable Person representing ECO e.g. Uber
territory
If ECO has neither physical nor any Person appointed by ECO for purpose of paying
representative in the taxable territory tax e.g. AIRBNB
Supply of following goods are covered under GST
Bidi wrapper, tobacco leaves, supply of lottery, used vehicles, waste & scrap, raw cotton.
Page | 36
Chapter 6 Composition Scheme
It’s not easy for small tax payer to maintain lots of accounting records and incur compliance costs.
Therefore small tax payers with aggregate turnover <=1 crore in preceding FY are eligible for
composition levy. However if registered person located in any special category states then
turnover should be <= 75 Lakhs in preceding FY (Section 10)
Limit of 1 crore is proposed to be increased to 1.5 crore
Special category of states – Arunachal Pradesh, Mizoram, Assam, Nagaland, Manipur, Sikkim,
Meghalaya, Tripura, Himachal Pradesh.
In case of Uttarakhand and Jammu and Kashmir, the turnover limit will be INR 1 Crore
At the end of the quarter, registered person opting for composition levy would pay a certain
specified percentage of his turnover of the quarter as tax, without availing the benefit of input tax
credit.
Rates of GST under Composition Scheme
In case of trader 0.5% CGST + 0.5% of aggregate turnover of

SGST/UTGST taxable supplies
In case of manufacturer other 0.5% CGST + 0.5% of aggregate turnover (taxable
than manufacturer of specified SGST/UTGST supplies + exempt supplies)
goods (pan masala, tobacco ice
cream, etc.)
In case of restaurant services 2.5% CGST + 2.5% of aggregate turnover (taxable
SGST/UTGST supplied + exempt supplies)
How to calculate aggregate turnover to check eligibility
Include Value of all outward supplies
Taxable supplies + Exempt supplies + Supplies which have Nil rate + Non-taxable supplies +
Exports + Inter-state supplies
(of person having same PAN computed on all India basis)
Excludes – CGST, SGST, UTGST, IGST, Cess, Value of inward supplies on which tax is payable under
reverse charge.
Example A Ltd. provides you the following details for year March 18, whether company can follow
composition scheme:
Value of taxable supplies 50 Lakhs

Sale of fresh fruits & vegetables 45 Lakhs (Exempt under GST)
Taken 20 Lakhs for Sponsorship services (GST payable under reverse charge)
Page | 37
In this case total value of turnover is 95 Lakhs (excluding supply chargeable under reverse charge)
which is less than 100 Lakhs hence A ltd can opt for composition scheme.
Condition to opt for composition scheme Section 10(2)

• Should be registered under GST Law
• Aggregate turnover < 100 Lakhs / 75 Lakhs
Following person cannot opt for composition scheme

• Engaged in supply of services other than supply of food for human consumption.
• Supplier of goods which are not taxable under GST (Natural gas, High speed diesel, Motor
spirit Aviation turbine fuel, Petroleum Crude)
• Engaged in inter- State outward supplies of goods (including export of goods) – however
goods can be purchased from other states
• Person supplying goods through an electronic commerce operator
• Manufacturer of ice cream, pan masala and tobacco
• Rule 5 – Casual taxable person, non-resident taxable person
Supplier of services cannot opt for composition scheme – however it is proposed that taxable
person providing services having turnover up to 50 Lakhs in preceding FY can pay composition
GST @6% (3% CGST + 3% SGST).
Proviso to Section 10(2) – All registered person having same PAN should opt for
composition levy
Person providing exempted service is eligible for composition scheme
(i) A person supplies goods and/or services (restaurant/catering service) and also supplies any
exempt services including services by way of extending deposits, loans or advances in so far as the
consideration is represented by way of interest or discount, the said person shall not be ineligible
for the composition scheme subject to the fulfilment of all other conditions specified therein.
(ii) Further, while computing aggregate turnover of such person in order to determine his eligibility
for composition scheme, value of supply of any exempt services shall not be considered
E.g. A ltd has 3 branches in 3 different states – all branches are registered in their respective states
but all have common PAN. So if A ltd wants to opt for composition scheme then all the branches
with head office should opt for the same.
Section 10(3) – As soon as aggregate turnover cross 100 Lakhs / 75 Lakhs – option of composition
scheme lapse.
Section 10(4) – Person who opts for composition scheme cannot collect GST from recipient and
shall not be entitled to ITC.
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Rule 3 & 4 of CGST Rules, 2017 Intimation for composition levy
Any person who is not registered and applies for registration may give his option to pay tax
under composition levy in form GST REG-01. The same shall be considered as intimation to pay tax
under Composition Levy.
Intimation by registered person
A registered person who opts to pay tax under composition levy scheme shall electronically file
intimation in prescribed form on the common portal prior to the commencement of the FY for
which said option is exercised and composition scheme shall be applicable from the
commencement of next financial year.
He shall also furnish statement in the prescribed form <= 60 days from commencement of next FY
for reversal of tax credit.
With the intimation - Details of stock needs to be furnished including inward supplies from
unregistered person held by him on the day preceding the date from which he opts for
composition levy.
Intimation in respect of any place of business in any state or UT shall be deemed to be intimation
in respect of all other places of business registered on the same PAN.
Rule 5 Condition and restriction for composition levy

Person who follows composition scheme shall
1) Mention the word “composition taxable person” on every signboard displayed at a
prominent place at his principal place of business and at every additional place or places of
business
2) Mention the word “composition taxable person, not eligible to collect tax on supplies” at
the top of the bill of supply issued by him. Supplier under composition scheme issues bill of
supply and not tax invoice.
3) Not file a fresh intimation every year and he may continue to pay GST under composition
scheme
Note – Person following composition scheme has to pay GST out of his own pocket even
with regard to supplies which are exempt from GST.
Section 10(3) read with Rule 6 – Validity of composition levy

Composition scheme shall remain valid till the person satisfies all the condition mentioned in
section 10 and Rule 3 to 7
The person shall be liable to pay tax under normal manner from the date he ceases to satisfy any
of the conditions and shall issue tax invoice for every taxable supply thereafter. However he can
claim ITC on stock and capital goods for which he can furnish a statement <= 30days of
withdrawal of the option.
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The person shall also file intimation for withdrawal from the scheme in form GST CMP-04 within 7
days of occurrence of such event
Section 10(5) read with Rule 6(4) and Rule 6(5) Penalty
If a taxable person has paid tax under the composition scheme though he was not eligible for the
scheme, the person would be liable to penalty and the provisions of section 73 or 74 of the CGST
Act shall be applicable for determination of tax and penalty.
Further, where the proper officer has reasons to believe that the registered person was not eligible
to pay tax under composition levy or has contravened the provisions of the Act/provisions of this
Chapter, he may issue a show cause notice to such person in prescribed form asking as to why
composition scheme should not be denied.
Upon receipt of the reply to such show cause notice from the registered person in prescribed form,
the proper officer shall issue an order in prescribed form within 30 days of the receipt of such
reply, either accepting the reply, or denying the option to pay tax under composition levy from the
date of the option or from the date of the event concerning such contravention, as the case may
be.
Filing of return under composition scheme

Filing of form GSTR-4 on quarterly basis electronically on common portal. This is mandatory even if
there is no transaction
Due date of filing GSTR-4 is 18th of month following the quarter

The return should contain invoice wise inter-state and intra state supplied received from the
registered and unregistered supplier. He will also furnish consolidated details of outward supplies
made by him
If the GSTR-4 is not filed for a given quarter, then the tax payer cannot file the next quarter’s
return.
GSTR-4 cannot be revised after filing on the GSTN portal. Any mistake in the return can be revised
in the next month’s return only
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Chapter 7 Input Tax Credit
GST paid by registered person on following is allowed as Input Tax Credit Section 16(1):
i.e. GST paid on following can be used to adjust output GST liability
To take ITC – GST paid on eligible input should be credited to electronic credit ledger.
What is Input Tax?
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Conditions for taking ITC Section 16(2) read with rule 36
1) Tax should have been actually paid to the government for which ITC is to be availed (either
in cash or by utilisation of ITC).
2) Possession of tax paying document like Tax invoice issued by supplier, Invoice issued by
recipient in case of reverse charge, Debit note to adjust amount, Bill of entry in case of
import, Invoice issued by Input Service Distributor (Discussed in CA Final).
3) The above documents should at least contains these details – Amount of GST charged,
Description of goods or services, Total value of supply, GSTIN of supplier and recipient,
Place of supply in case of inter-state supply.
4) The registered person taking ITC must have received the goods/services. If goods are
purchased by recipient but on his direction are directly delivered to third party (i.e. his
customer) by the supplier then also it is deemed to be receipt of goods/services and is
known as “Bill to -- Ship to” model.
5) If advance is received for service then instead of tax invoice – receipt voucher is issued and
ITC will not be available on tax paid on advance. It will be available when service is received
and tax invoice is issued.
Notes – If recipient intends to take ITC then GST paid should not become part of the cost. E.g. Raw
material of 10000 + 1800 (GST) = 11800 paid, if ITC needs to be taken then raw material cost
would be taken as INR 10000 since benefit of 1800 paid can be taken in the form of ITC so it will
not become part of the cost.
Proviso to section 16(2)
1) Goods received in lots/ instalments – ITC can be taken upon receipt of last lot
2) Payment for the invoice must be made within 180 days (Rule 37 + Second Proviso). Credit
taken earlier but payment not made <= 180 days in that case ITC availed will be added to
output tax liability together with interest @ 18%. This condition is not applicable for
a. Supplies under reverse charge

b. Deemed supplies without consideration
3) If later on payment is made then ITC can be taken again
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Section 16(3) GST paid on capital goods – ITC taken doesn’t form part of actual cost, hence
depreciation not allowed on ITC. E.g. Machinery purchased 1 Lakh + 18000 (GST), so actual cost is
1 Lakhs as 18000 can be used as ITC. Depreciation is allowed on 1 Lakh.
If depreciation is taken on GST component then ITC is not available.
Section 16(4) Time limit of availing ITC

ITC on invoices or debit notes (for current financial year) can be availed by earlier of due of filing
return of September of next year (20 October) or date of filing annual return.
This condition does not apply to re-availment of ITC which is reversed earlier.
Section 17 & Rule 42, 43

Tax credit in case of Inputs/Capital Goods are used for taxable as well as exempted supply
Generally ITC can be taken only if goods/services are used to provide taxable supplies.
Section 17(1) and Section 17(2) read with rule 42 & 43

(a) Goods and / or services are used by the registered person partly for the business and partly for
other purposes. Then ITC can be taken for Inputs which are used for business purpose. [Section
17(1)];
(b) When the goods and / or services are used by the registered person partly for making taxable
supplies including zero-rated supplies and partly for making exempt supplies then ITC shall be
restricted to tax paid on taxable supplies including zero rated supply [Section 17(2).
Zero rated supply means – export of goods/services or supply of goods/services to SEZ

developer/SEZ unit at which no GST is charged
ITC available if goods/services used for export / supply to SEZ – i.e. refund of ITC allowed
Exempt supply means goods/services which are non-taxable, wholly exempt from tax, taxable at nil
rates.
Exempt supply includes supply on which recipient is liable to pay tax.
Rule 42 Apportionment of ITC of Inputs
Tax credit shall be allowed but subsequently proportionate amount relating to exempt
supplies/non-business purpose shall be reversed.
ITC of Input and Input services used for mixed purpose needs to be segregated as follows:
ITC related to exempt supply = Common credit * Exempt Turnover/Total Turnover
ITC attributable for non-business purpose 5% of common credit
Page | 43
Example - Ezee Footwear, which manufactures two varieties of exempt Hawai slippers and five
varieties of taxable sandals and shoes, has the following turnover in October and has 1,15,000
common credit that has to be apportioned:
Turnover of Hawai 1 plus Hawai 2 is 3 crore
Turnover of all varieties of taxable shoes and sandals 2 crore
Total turnover of all footwear during the month is 5 crore
Solution 115000 * 3 crore / 5 crore = 69000 ITC pertains to exempt supply
Rule 43 Apportionment of ITC of Capital Goods
Tax credit shall be availed in the beginning but proportionate amount of ITC shall be reversed
every month on the basis of turnover. Life of every capital asset shall be taken as 60 months from
the invoice date.
E.g. Plant & Machinery purchased for 20 Lakhs and 3 lakhs paid as input tax. This machinery is
used for manufacturing both exempt (2 Lakhs monthly turnover) and taxable supplies (6 Lakhs
monthly turnover).
In this case ITC 3 Lakhs/60 months = 5000 one month

5000 * 2 Lakhs/8 Lakhs – INR 1250 needs to be reversed
This will be done every month depending on the monthly turnover; it will stop after 60 months.
If Capital goods used or intended to be used exclusively for non-business purposes or making
exempt supplies but subsequently it is brought to use for making taxable as well as exempt
supplies the deduction shall be allowed @ 5% per quarter or part thereof from the Input tax and
ITC to be reversed shall be calculated on the balance amount of input tax.
E.g. In above example assume that P&M was used for making only exempted goods but after 1
year and 2 months and 20 days, it has brought to use for making both exempted and taxable
supplies.
In this case total ITC was 3 Lakhs

Less 3 Lakhs * (5% * 5 quarters) = (75000) this is not allowed earlier as only used to make
exempted supply
Remaining credit 225000
Remaining useful life = 45 months 20 days, ignore fraction = 45 months

225000/45 * 2 lakhs / 8 Lakhs
= 1250 to be reversed
Section 17(4) and Rule 38 Optional Method for Banks/Financial Institutions/NBFC

They have the option to limit its availment of ITC to 50% of the eligible ITC on inputs, capital
goods and input services each month and the remaining ITC shall lapse.
Page | 44
ITC of inputs and input services that are used for non-business purposes and items mentioned u/s
17(5) [blocked credit] cannot be availed.
The restriction of availing 50% ITC shall not apply to the tax paid on supplies procured from
another registration within the same entity i.e., 100% credit of such tax can be availed.
Option once exercised cannot be changed during the remaining part of the financial year.
Blocked Credit Section 17(5)
ITC of tax paid on almost every inputs and input services used for supply of taxable goods or
services or both is allowed under GST except a small list of items provided u/s 17(5). The detailed
list is given hereunder:
1) Motor vehicles and other conveyances except when they are used for transportation of
goods or passengers (not employees), further supply of such vehicle or conveyances,
imparting training on driving, flying, navigating such vehicles or conveyance.
ITC of GST paid on repairs and maintenance is also not allowed except in the above
mentioned cases
2) Food and beverages, outdoor catering beauty treatment, health services, cosmetic and
plastic surgery, life insurance premium, health insurance premium, rent a cab except when
(in below cases ITC allowed)
a) An inward supply of these is used for making an outward taxable supply of the same
category or as an element of a taxable composite or mixed supply.
b) The government has made it obligatory for an employer to provide any of these services
to its employees.
3) Membership of a club, health and fitness centre.
4) Travel benefits to employees on vacation such as LTC or home travel concession
5) Works contract services for construction, repairs, renovations, additions, alterations, re-
constructions of an immovable property.
If immovable property is P&M or input service used for further supply of works contract
service then ITC allowed
6) Inward supplies received by a taxable person for construction, repairs, renovations,

additions, alterations, re-constructions of an immovable property (other than plant and
machinery) on his own account even when such supplies are used in the course or
furtherance of business.
“Plant and machinery” means apparatus, equipment, and machinery fixed to earth by
foundation or structural supports but excludes land, building or other civil structures,
telecommunication towers, and pipelines laid outside the factory premises
7) Inward supplies on which tax has been paid under composition scheme
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8) Inward Supplies received by a non-resident taxable person except on goods imported by

him
9) Goods/services used for personal consumption (may be of employees, directors, partners or

even others).
10) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples
11) Tax paid after allegation of fraud, wilful misstatement or suppression of facts or tax paid
after detention of goods in transit for violation of provisions of E-Way Bill or penalty paid
after confiscation of goods.
Example
ABC Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with XYZ Ltd. for
the month of October, 2018 from the following particulars:-
Inward supplies GST (INR) Remarks

Inputs ‘A’ 1,00,000 One invoice on which GST payable was
10,000, is missing
Inputs ‘B’ 50,000 Inputs are to be received in two
instalments. First instalment has been
received in October, 2018.
Capital goods 1,20,000 XYZ Ltd. has capitalised the capital goods
at full invoice value inclusive of GST as it
will avail depreciation on the full invoice
value.
Input services 2,25,000 One invoice dated 20.01.2018 on which
GST payable was 50,000 has been
received in October, 2018.
Note:
(i) All the conditions necessary for availing the ITC have been fulfilled.
(ii) XYZ Ltd. is not eligible for any threshold exemption.
(iii) The annual return for the financial year 2017-18 was filed on 15th September, 2018.
Solution
Inward Supplies ITC Allowed
Inputs ‘A’ 90,000
ITC cannot be taken on missing invoice. The registered person should have the
invoice in its possession to claim ITC-Section 16(2)(a)]
Inputs ‘B’ Nil
When inputs are received in instalments, ITC can be availed only on receipt of last
instalment-First proviso to section 16(2)]
Capital goods Nil
Input tax paid on capital goods cannot be availed as ITC, depreciation has been
Page | 46
claimed on such tax component Section 16(3)]

Input services 1,75,000
As per section 16(4), ITC on an invoice cannot be availed after the due date of
furnishing of the return for the month of September following the end of financial
year to which such invoice pertains or the date of filing annual return, whichever
is earlier.
Since the annual return for the FY 2017-18 has been filed on 15th September,
2018 (prior to due date of filing the return for September, 2018 i.e., 20th October,
2018), ITC on the invoice pertaining to FY 2017-18 cannot be availed after 15th
September, 2018.
Entitlement of ITC at the time of Registration/Voluntary Registration Section 18 and Rule 40
A person who has applied for registration within 30 days from the date on which he becomes
liable to registration and has been granted such registration Section 18(1)(a)
Or
Person who is not required to register, but obtains voluntary registration Section 18(1)(b)
In both above cases – That person can take ITC of Inputs held in stock and inputs contained in
semi-finished or finished goods on the day immediately preceding the date from which he
becomes liable to pay tax.
ITC to be availed within 1 year from the date of the issue of the tax invoice by the supplier. Further
ITC can be claimed earlier of due date of filing September month return of next FY or date of filing
annual return. Section 18(2)
No credit allowed for capital goods in above 2 cases.
Person has to submit form ITC-01<=30days from the date he becomes eligible to avail ITC, if total
ITC>2 Lakhs then should be certified by a Chartered Accountant / Cost Accountant
Example Mr Z becomes liable to pay tax on 1st August and has obtained registration on 15th
August. Mr Z is eligible for ITC on inputs held in stock and as part of semi-finished goods or
finished goods held in stock as on 31st July. Mr Z cannot take ITC on capital goods.
ITC in Case of shifting from composition scheme to normal scheme or where exempt supply
becomes taxable Sec 18 (1)
Rule 40
Such person shall be entitled for ITC related to inputs held in stock/semi-finished/finished goods
and on capital goods on the day immediately preceding the date from which he becomes liable
to pay tax or such supply becomes taxable.
The credit on capital goods shall be reduced by 5% per quarter of a year or part thereof from the
date of invoice. Refer example on page 4
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ITC to be availed within 1 year from the date of the issue of the tax invoice by the supplier.
Person has to submit form ITC-01<=30days from the date he becomes eligible to avail ITC, if total
ITC>2 Lakhs then should be certified by a Chartered Accountant / Cost Accountant.
In case of shifting from normal scheme to composition scheme or where taxable supply
becomes exempt Sec 18(4) Rule 44
ITC on inputs will be reversed proportionately on the basis of corresponding invoices on which
credit had been availed on such inputs. If invoices are not available, the ITC to be reversed will be
based on the prevailing market price of such goods on the date of switch over/exemption. The
details furnished on the basis of prevailing market value will be duly certified by a practicing
Chartered Accountant/ Cost Accountant.
In case of capital goods – Remaining ITC needs to be reversed taking useful life as 60 months.
Balance of ITC lying in electronic credit ledger shall lapse, applicant has to submit form no. ITC-03.
Example – Mr A purchased a Machine for 60 Lakhs and paid Input tax at a rate of 20% but he has
shifted to composition scheme after 38 month and 9 days. Compute amount of tax credit to be
reversed by Mr A
39 months (after rounding off – part of the month considered as full month)
60 months – 39 months = 21 months (Remaining)
So 12 Lakhs (ITC) * 21/60 = INR 4,20,000 to be reversed
ITC In case of Amalgamation / Demerger / Lease/ Transfer/Sale/Merger together with

transfer of liability Section 18(3) / Rule 41
Such transferor shall be allowed to transfer ITC which remains un-utilized in his electronic credit
ledger to transferee.
Information shall be submitted in form no ITC-02 by the transferor and the transferee shall accept
it on the common portal and ITC shall be credited to electronic credit ledger of the transferee.
In case of demerger ITC shall be apportioned in the ratio of value of asset transferred to new unit.
Registered person has to furnish the details of change in constitution on the common portal
together with certificate from practicing Chartered Accountant/Cost Accountant.
Reversal of ITC in case of supply of capital goods on which ITC has been taken or in case of
cancellation of registration Section 18(6) Rule 40
In case of capital goods on which ITC has been taken & supplied outwards (transferred or sold) by
the registered person then he must pay the amount of tax which is higher of:
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1) ITC taken on such goods as reduced by 5% per quarter of a year or part thereof from the
date of issue of invoice for such goods (i.e. pertaining to remaining useful life of capital
goods)
2) The tax on the transaction value of such capital goods (i.e. tax collected on selling value)
Note – If refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable
person may pay tax on the transaction value.
Example – A ltd purchased a machinery for 8 lakhs on 1/7/17 on which it paid IGST @ 18%. It
started using machinery and availed ITC on immediate basic. On 2/10/18 it has sold the machinery
as second hand machine for 7 Lakhs. Calculate the amount of GST to be reversed by A ltd.
3 quarters in 17-18
3 quarters in 18-19 (part of the quarter treated as full quarter)
Total 6 quarters
144000 * 5% * 6 = 43,200
Remaining credit = INR 100,800
Or second hand machine sold for 7 lakhs * 18% = INR 126,000
A Ltd should reversed INR 126,000
How ITC is Utilised
Page | 49
Payment of Tax
Payment is made through a challan which can be generated online on the GST portal. E challan is
valid for 15 days. The mandate form is obtained after making NEFT/RTGS payment has to be
submitted in the bank.
Unregistered person has to make payment on the basis of temporary identification no. generated
through common portal.
On successful credit of amount in government a/c – a challan identification no. (CIN) will be
generated by the collecting bank which will be indicated on the challan. CIN is 17 digit no. 14 digit
is CPIN (Common portal identification no.) plus 3 digit for bank code.
CIN is communicated by the authorised bank to taxpayer as well as GSTN.
On receipt of CIN from the bank the receipt will be generated by the common portal.
Certain categories of registered persons will be required to pay to the government - Tax Deducted
at Source (TDS) and Tax Collected at Source (TCS) discussed at Final level.
Electronic Ledgers – Maintained on GST portal
Electronic Cash Ledger Section 49(1), 49(3) and Rule 87
Maintained in form GST PMT-05 and contains summary of deposits/payments made by tax payer.
This ledger can be used for making any payment towards tax, interest, penalty, fee or any other
amount on account of GST.
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Over the counter means by Cash, cheque, demand draft

However in below cases deposit > 10000 per Challan per tax period can be made through over the
counter mode:
1) Deposit made by authorised proper officer – to recover outstanding dues including
attachment proceedings/sale of moveable/immovable properties
2) To collect the amount by way of investigation
3) Deposit made by person notified by the commissioner
Amount deposited in one major head will reflect in the electronic cash ledger and can be
used to pay the liability of that particular head only.
Electronic Credit Ledger Section 49(2), 49(4), 49(5), Rule 86
Maintained in form GST PMT 02 - also known as electronic input tax credit ledger
Every claim of ITC shall be credited to this ledger; it shall be debited to the extent of discharge of
any liability.
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Electronic Liability Register Section 49(7), 49(8), 49(9) and Rule 85
Maintained in form GST PMT 01 for each person liable to pay tax, interest, penalty, late fee or other
amount on the common portal and all amount payable by him shall be debited in this ledger.
Payment of liability by registered person as per his return shall be made by debiting electronic
credit ledger or electronic cash ledger and electronic liability ledger shall be credited.
The amount payable on reverse charge basis or amount payable under composition scheme,
amount payable toward interest, penalty, fee or other amount under the act shall be paid only by
debiting electronic cash ledger and crediting electronic liability ledger.
Where a person has claimed refund of any amount from the electronic cash or credit ledger, the
said amount shall be debited to the electronic cash or credit ledger.
Taxable person who has paid tax in error is entitled to refund
What happens if the taxable person files the return but does not make
payment of tax?
In such cases, the return is not considered as a valid return. It is only the valid return that would be
used for allowing input tax credit (ITC) to the recipient
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Utilization of ITC Section 49(5) and Section 53
Interest on delayed payment of Tax Section 50
18% - in case of belated payment of tax

24% - on undue or excess claim of ITC or on such undue or excess reduction in output tax liability
Period starts from date following the due date of payment and
Ends on date of actual payment of tax
Payment of interest –
The interest payable shall be debited to electronic liability register
The liability for interest can be settled by adjustment with balance in electronic cash ledger but not
with balance in electronic credit ledger.
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Chapter 8 Registration under GST
Who is required to take registration Section 22(1)
Every supplier whose aggregate turnover of goods/services exceeds

20 lakh including J&K (Limits proposed to be increased to 40 lakhs)
10 lakh in case of Special Category States (even if any branch is located in these states then 10
Lakh limit to be taken)
Special Category of States - Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,

Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Has to apply for registration within 30 days of crossing the limit
Aggregate turnover includes taxable supply + exempt supply + exports + inter-state supplies +
outward supply taxable under reverse charge (calculated on all India basis for same PAN).
Turnover includes direct supply and supply on behalf of his principal
In case of job work – Value of material is included in the aggregate turnover of principal and not
of the job worker.
Turnover doesn’t include CGST, SGST, UTGST, IGST, Compensation cess and value of inward supply
taxable under RCM.
Once turnover crosses the limit then registration needs to be taken even if in next year turnover
falls below the limit.
Compulsory registration required in the following cases Section 24
• Inter-State supplier of goods even if turnover is <= 20L/10L

• Casual taxable person making taxable supplies
• Person liable to GST under RCM u/s 9(3)
• E-commerce operator i/s 9(5)
• Non-resident taxable person making taxable supplies
• Person who are required to do TDS u/s 51 or TCS u/s 52 – CA Final
• Person who supplies on behalf of some other taxable person (i.e. an agent of some
principal)
• Input service distributor (separate registration required apart from normal registration)
• Every person supplying online information & database access retrieval services (OIDAR)
from a place outside India to a person in India
• Person/class of persons notified by the Central/State Government.
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Persons not liable for registration Section 23

Person engaged exclusively in supplying goods/services which are not liable to GST or are wholly
exempt from tax
Agriculturist - Limited to supply of produce out of cultivation of land
Specified category of persons notified by the government:

1) Persons making only reverse charge supplies and total tax is to be paid by recipient
2) Persons making inter-State supplies of taxable services up to 20Lakhs/ 10 Lakhs
3) Casual taxable persons making inter-state taxable supplies of handicraft goods up to 20
Lakhs/10 Lakhs. However they need to have PAN and have to generate E-way bill even if
value is < 50000.
4) Job workers having turnover < = 20/10 Lakhs on all India basis and making inter-state
supplies to registered dealer – this exemption not available to services in relation to
jewellery, goldsmiths’ and silversmiths’ wares and other articles.
5) Person supplying services through E-commerce operator not required to take
registration if turnover <= 20L/10L.
In case of amalgamation/ demerger by an order of high court etc. - Transferee is liable to be

registered from the date on which Registrar of Companies issues incorporation certificate giving
effect to order of High Court etc.
Succession of business Section 22(3) – Transferee is liable to be registered with effect from the
date of such transfer or succession.
Procedure for Registration Section 25
Sec 25(1) - Every person who is liable to get registration u/s 22 or 24 shall apply for registration in
State or UT from which he supplies taxable goods or services.
Registration to be applied <=30 days from the date of becoming liable to registration.
Refer Rule 8 for detailed procedure
However if in one state there are multiple branches then single registration can be taken for that
state stating any one place as principal place of business.
Further if supplier has different business verticals in the same state then he has the option to take
separate registration for each vertical.
Proviso to section 25(1) – Casual taxable person or non-resident taxable person shall apply for
registration at least 5 days prior to commencement of business. PAN is mandatory to apply for
registration.
Person making supply from territorial waters of India shall obtain registration in the coastal state
or union territory where nearest point of the appropriate base line is located.
Sec 25(3) – If any person is not required to take registration then also he may take a registration
voluntarily. Once registration is taken then GST needs to be paid even if turnover <= 20L/10L.
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Sec 25(4) & 25(5) – Person who has obtained more than 1 registration in different states/UT will
be treated as distinct persons in respect of each registration.
Sec 25(6) – Every person should have a PAN to be eligible for grant of registration
Sec 25(7) – A non-resident person not having PAN may be granted registration based on other
documents as prescribed.
Sec 25(9) In below cases instead of registration Unique identification number (UIN) is
obtained:
1) Any agency of the UNO
2) Consulate or Embassy or High Commission of Foreign countries
3) Any other person as notified by commissioner
This UIN is needed for claiming refund of taxes paid on notified supplies received in above 3 cases.
Sec 25(10) Registration or UIN shall be granted after due verification within 3 days from the date
of submission of application or after receiving recommendations from Ministry of external affairs,
government of India.
Sec 25(12) If no deficiency has been communicated to the applicant within above mentioned
period then it will be deemed that registration or UIN has been granted.
Rule 17(1A) – The UIN granted shall be applicable to whole of India and thus registration in each
state is not required.
Section 25(8) Rule 16 Registration by proper officer Suo-Motu without application
Where a person liable for registration fails to apply for such registration, proper officer may
register the said person on a temporary basis and issue an order in prescribed form.
Such person shall either:

Submit an application for registration in prescribed form <= 90 days from the date of grant of
temporary registration. Or
File an appeal against such temporary registration with appellate authority
If the Appellate Authority upholds the liability to registration, application for registration shall be
submitted within 30 days from the date of issuance of such order of the Appellate Tribunal.
25(11) A certificate of registration shall be issued in such form and with effect from such date as
may be prescribed.
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Section 26 Deemed Registration
If any person has taken registration under any SGST/UTGST act then it shall be deemed to be a
registration under CGST/IGST act also.
Any rejection of application under SGST/UTGST act shall be deemed to be a rejection under
CGST/IGST act.
Procedure for registration [Section 25 read with rules 8, 9 & 10]
Procedure so laid down will not apply to:
• Non-resident taxable person

• A person required to deduct tax at source under section 51 or collect tax u/s 52
• A person supplying OIDAR services from a place outside India to a non-taxable online
recipient referred to in section 14 of IGST Act.
Application for registration by Special Economic Zone (SEZ) [Proviso to rule 8(1) of the CGST
Rules]: A person having unit in SEZ/SEZ
Special Economic Zone (SEZ) [Proviso to rule 8(1) of the CGST Rules]: A person having unit in
SEZ/SEZ developer will make a separate application for registration as a business vertical distinct
from his other units located outside SEZ.
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Physical verification of business premises in certain cases after grant of registration [Rule
25]
Where the proper officer is satisfied that the physical verification of the place of business of a
registered person is required after grant of registration, he may get such verification done and the
verification report along with other documents, including photographs, shall be uploaded in the
prescribed form on the GST Common Portal, within 15 working days following the date of such
verification.
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Issuance of registration certificate [Rule 10]
Where the application for grant of registration has been approved, a certificate of registration
[duly signed or verified through Electronic Verification Code (EVC) by the proper officer] in FORM
GST REG-06 showing the principal place of business (PPOB) and additional place(s) of
business (APOB) is made available to the applicant on the Common Portal and a Goods and
Services Tax Identification Number.
(hereinafter referred to as “GSTIN”) i.e. the GST registration no. is communicated to applicant,
within 3 days after the grant of registration.
Display of registration certificate and GSTIN on the name board [Rule 18]
Every registered person shall display his registration certificate in a prominent location at his PPOB
and at every APOB. Further, his GSTIN also has to be displayed on the name board exhibited at the
entry of his PPOB and at every APOB.
Where an applicant submits application for Effective date of registration is

registration
within 30 days from the date he becomes liable the date on which he becomes liable to
to registration registration
after 30 days from the date he becomes liable date of grant of registration
to registration
Documents to be attached to application

Photograph of proprietor, Karta, Partner, CEO, MD etc.
Constitution of business like partnership deed or registration certificate
Proof of address of principal place of business
Bank account related proof
Special provisions relating to casual taxable person and NR taxable person Section 25, 27
and Rule 13, 15
Casual taxable person (CTP) – is a person who occasionally undertakes transaction 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 union territory where he has no fixed place of business.
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Non-Resident Taxable Person (NRTP) - 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.
Both CTP and NRTP cannot exercise the option to pay tax under composition levy.
CTP & NRTP are required to take registration at least 5 days prior to commencement of business.
They shall be given temporary reference no. advance deposit of tax. Registration shall be granted
only after the applicant has paid estimated amount of GST in advance (credited to electronic cash
ledger).
NRTP shall electronically submit an application along with self-attested copy of his passport.
Certificate shall be valid for maximum 90 days, however proper officer may extend it further by
max 90 days so total can be 180 days.
To extend the period of registration indicated in his application – an application in Form GST REG-
11 shall be submitted by such person before end of the validity of registration.
Casual taxable person have to submit monthly return, amount of advance tax cannot be refunded
unless return is furnished.
NRTP shall furnish GST return in GSTR-5 within

20 days after the end of the month or
7 days after the last day of validity of registration
whichever is earlier
If no transaction in that month then no return required to be filed.
Registration under composition levy
If one business vertical is paying tax under normal levy, then no other business vertical shall be
granted registration to pay tax under composition levy.
Similarly if one business vertical [separately registered] becomes ineligible to pay tax under
composition levy, all other business verticals would also become ineligible.
Amendment in registration certificate Section 28/Rule 19
If any change has to be done in name & address of the business, addition/deletion of
partners/directors of business, change in mobile no. / Email address to authorized signatory.
Every registered person shall apply online for amendment in form REG 14 <= 15 days from change
along with the documents relating to such change. Application to be submitted on GST common
portal and registration certificate will get amended. However if change is related to core fields (see
below diagram) then permission of proper officer required.
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Such amendment shall be applicable for all the registration with same PAN. Where a change in the
constitution of any business results in change of PAN of a registered person, the said person shall
apply for fresh registration. The reason for the same is that GSTIN is PAN based. Any change in
PAN would warrant a new registration.
Any particular of the application for registration shall not stand amended with effect from a date
earlier than date of submission of application for amendment on common portal except with order
of Commissioner for reasons to be recorded in writing and subject to conditions specified by
commissioner in the said order.
The proper officer may approve the amendments <=15 working days from date of receipt of
application and issue an order in form REG-15 and such amendment shall take effect from the date
of such change.
Cancellation of Registration Section 29 Rule 20, 21, 22
For this section - Proper officer is superintendent of central excise.
Cancellation at the request of applicant

A registered person shall submit electronically submit an application in form REG-16 giving details
of liability and payment of tax < = 30 days of occurrence of the event which calls for cancellation.
Details of inputs held in stock/semi-finished/finished goods and of capital goods also needs to be
submitted.
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In the below cases, application for cancellation of registration needs to be submitted:

1) The business is discontinued
2) Business is transferred for any reason including death of the proprietor
3) Business has been amalgamated with other legal entity
4) Business has been demerged/disposed off
5) There is any change in the constitution of the business
6) The taxable person is no longer liable to be registered u/s 22 or 24
Voluntarily registered person shall file application for cancellation anytime.
Where a person who has submitted an application for cancellation of his registration is no longer
liable to be registered, proper officer shall issue the order of cancellation of registration within 30
days from the date of submission of application for cancellation.
Once registration is cancelled – registered person needs to reverse ITC (by debit in electronic
credit ledger or cash ledger) in connection with inputs or capital goods and shall submit final
return in form no. GSTR-10 u/s 45 <= 3 months from the date of order of cancellation.
Such reversal of tax credit on inputs will be higher of:

ITC of inputs or capital goods on the day immediately preceding the date of cancellation or output
tax payable on such goods.
Cancellation by GST officer suo moto (on his own)
In the below cases proper officer can cancel the registration

• Registered person does not conduct any business from the declared place of business
• Registered person issues invoice/bill without supply of goods/services in violation of the
provisions of this Act, or the rules made thereunder.
• Registered person violates the provisions of section 171 of the CGST Act. (He doesn’t pass
on the benefit of decreased GST rates to the customer)
• Registered person has not filed returns for continuous 6 months (3 consecutive tax periods
in case of a person who opted for composition levy)
• Voluntarily registered person has not commenced the business within 6 months from the
date of registration
• Registration was obtained by means of fraud, wilful misstatement or suppression of facts.
The proper officer shall issue a notice before cancellation and after giving an opportunity of being
heard decision shall be taken to cancel the certificate. (1st proviso to sec 29(2))
If certificate is cancelled, ITC shall be reversed and final return has to be filed.
Rule 20 – person to whom a UIN has been granted under rule 17 cannot apply for cancellation of
registration.
The cancellation of registration will not affect liability of registered person to pay tax and other
dues under the Act for any period prior to the date of cancellation.
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Revocation of cancellation of registration Section 30 / Rule 23
If registration is cancelled by proper officer on his own motion then registered person may apply
to such officer for revocation of cancellation of the registration in form REG-21 <= 30 days from
date of service of the cancellation order.
No application for revocation shall be filed if registration has been cancelled for failure to furnish
returns unless such returns are furnished and any amount due as GST along with interest, penalty
and late fee has been paid.
Where proper officer is satisfied that there are sufficient grounds for revocation of cancellation of
registration he shall revoke the cancellation of registration.
The proper officer may reject the application by an order if sufficient grounds for revocation are
not found. However he will issue a show cause notice to applicant who shall submits his reply
within 7 working days. The proper officer shall dispose the application (accept/reject the same)
within 30 days of receipt of clarification.
Prohibition of unauthorised collection of tax Section 32

Unregistered person cannot collect GST in respect of any supply of goods or services.
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Chapter 9 Tax Invoice
Particulars of Tax invoice Section 31 / Rule 46
No format is prescribed for an invoice – but it is mandatory to have following fields:

Name, address GSTIN of the supplier & recipient (UIN of recipient if applicable)
If recipient is unregistered and value of taxable supply >= 50000 then mention name & address of
the delivery, along with state and its code.
Date of issue invoice
Serial no. should not be more than 16 characters
Particulars of Bill of Supply Section 31(3)(c) and rule 49
A registered person supplying exempted goods or services or both or paying tax under
composition levy shall issue a bill of supply instead of a tax invoice. It contains:
Name address GSTIN of supplier and recipient (UIN of recipient if applicable)
Consecutive serial no.
Date of issue, HSN code, Description of goods/services, Value of supply, signature or digital
signature of supplier or his authorised representative.
Invoice cum bill of supply Rule 46A

A registered person supplying taxable as well as exempted supply can issue single “Invoice cum bill
of supply”
Manner of Issue of Invoice Rule 48
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The serial number of invoices issued during a tax period shall be furnished electronically [through
the Common Portal – www.gst.gov.in], in FORM GSTR-1 [Details of outward Supplies of goods or
services
Time of supply of invoice for goods / services Section 31(2) and Rule 47 – already done in
first chapter
Documents to be filed in lieu of tax invoice
GTA to issue tax invoice, containing gross weight, name of consignor, registration no. of goods
carrier, details of place of origin and destination etc.
Passenger transportation – Tax invoice shall include ticket which may or may not have address of
the recipient
Section 31(7) – Issue of invoice in case of goods are sent on approval basis
Goods are removed before supply takes place (i.e. sent on approval basis) in such case delivery
challan should be issued. If sale is outside the state then IGST is payable:
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Invoice needs to be issued earlier of:
1) Before or at the time of supply

2) Six months from date of removal
Credit note Section 34
Credit note issued by supplier will reduce the tax liability; the records of the credit note have to be
retained until the expiry of 72 months from the due date of furnishing of annual return.
Issuance of credit note will allow the supplier to decrease his tax liability in his returns without
requiring him to undertake any tedious process of refunds.
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Revised Tax invoice and credit or debit note Sec 31(3) & Rule 53
Issue of revised invoices for goods sold during the period prior to registration Rule 53(2)
A registered person issue revised invoices within 1 month from the date of issue of registration
certificate; this can be done for all invoices issued during the period starting from date of effective
registration and ending on date of issue of registration certificate.
This helps recipient to take ITC for the supplies taken by them
A registered person may issue consolidated revised tax invoice in respect of all taxable supplies
made to the unregistered person during such period.
In case of interstate supplies if the value <= 2.5 Lakhs – a consolidated revised invoice may be
issued separately in respect of all unregistered recipients located in the state
Revised tax invoice and credit/debit note shall contain the following particulars namely –
The word “Revised Invoice” written prominently
Name, address and GSTIN of the supplier & recipient (UIN instead of GSTIN if applicable)
Nature of the document
A consecutive serial number not exceeding 16 digits
Serial no. of corresponding tax invoice/ bill of supply
Name & address of the recipient with state name & code – if recipient is unregistered
Value of taxable supply, rate of tax, and amount of tax credit
Signature or digital signature of the supplier or his authorized representative
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Supplies between date of grant of certificate of registration & effective date of registration
Issue of invoice or bill of supply where amount is less than 200 – section 31(3)
As per section 31 or rule 46 a registered person may not issue tax invoice if value of goods or
services < 200
Rather a consolidated invoice can be issued for such supplies at the end of each day provided the
recipient is not a registered person and the recipient does not require such invoice
Similar provision shall be applicable in case of bill of supply
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Receipt Voucher Section 31(3)(d) Rule 50
On receipt of advance payment a registered person shall issue receipt voucher
Receipt voucher contains following particulars:
Name, address GSTIN of the supplier and recipient (UIN if applicable)

Consecutive serial number, date of issue, description of goods/services, amount of advance taken,
rate and amount of tax, whether tax is payable on reverse charge, signature/digital signature
Relaxation for advance received is given in case of supply of goods
Refund of advance payment where no invoice is issued Section 31(3)(e) Rule50
Content of refund voucher

Name, address GSTIN of supplier and recipient (UIN if applicable)
Consecutive serial number
Date of issue
Number and date of receipt voucher
Amount of refund
Description of goods/services and amount
Rate of tax, amount of tax, whether tax payable under reverse charge
Signature / Digital signature
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Delivery challan Rule 55

As per section 31 deliveries of goods is not allowed without issue of invoice, however in below
cases goods may be removed on delivery challan and invoice may be issued after delivery.
1) Supply of liquid gas where the quantity at the time of removal is not known,
2) Transportation of goods for job work
3) Transportation of goods for reasons other than by way of supply e.g. goods delivered to
branch in same state
Delivery challan shall be prepared in triplicate
Where goods are being transported on a delivery challan in lieu of invoice, the same shall be
declared in E-Way Bill
Tax invoice to be issued after delivery of goods
Delivery challan shall contain –

Date & number of delivery challan
Name, address GSTIN of consignor and consignee (UIN of consignee if applicable)
Quantity of goods, taxable value, tax rate & amount, Signature/ Digital signature
Delivery of goods where goods are supplied in semi knocked down or completely knocked
condition Rule 55
(a) The supplier shall issue the complete invoice before dispatch of the first consignment;
(b) The supplier shall issue a delivery challan for each of the subsequent consignments, giving
reference of the invoice;
(c) Copies of the corresponding delivery challan shall accompany each consignment along with a
duly certified copy of the invoice; and
(d) The original copy of the invoice shall be sent along with the last consignment.
Harmonized system of nomenclature code

8 Digit Code used for classification of goods - HSN code
6 digit code used for classification of services is called as SA code
No HSN code is to be mentioned on invoice if turnover <=1.5 crores in preceding FY
If turnover is > 1.5 crores but <= 5 crores in preceding FY then HSN code at 2 digit level is
required
If turnover > 5 crores in preceding FY then HSN code at 4 digit level is required
8 Digit HSN in case of exports
Invoices for export or supplies to SEZ / SEZ developer
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Invoice shall carry an endorsement “Supply meant for export / supply to SEZ unit”. Further invoice
shall contain
Name & address of recipient
Address of delivery
Name of country of destination
Value of invoice should be transaction value and should match with the value declared with
shipping bill or bill of export
Sale to unregistered dealer
The registered person may not issue tax invoice if the recipient is unregistered person and the
recipient does not require the invoice
In such case registered person shall issue consolidated tax invoice for all supplies made during
each day.
Amount of tax on the invoice Section 33

If the supply is made for the consideration then every person who is liable to pay tax for such
supply shall prominently indicate in all documents, tax invoice etc. the amount of tax which forms
part of the price at which such supply is made.
Collection of Tax Section 32

Unregistered person shall not collect tax for supply of goods or services. A registered person shall
not collect tax except in accordance of provision of this act.
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Chapter 9 E-Way Bill - Rule 138
E-way bill is an electronic document generated on the GST portal evidencing movement of goods.
The movement may be in relation to supply or for reasons other than supply (e.g. own use by
taxable person, sending cranes/ cement mixture to site)
www.ewaybillgst.gov.in is the common portal for furnishing E-Way Bill
E-way Bill is mandatory in case of movement of goods of a consignment value exceeding INR
50,000 (Including GST). Value < 50000 (E-way bill optional)
In these cases E-Way bill should be generated for inter-state movement even if value of
consignment < INR 50000
1) Transfer of goods by principal to job-worker
2) Transfer of handicraft goods by a person exempted from obtaining registration
For interstate movement of goods – if total of all consignments in one conveyance > 50000 then
also E-way bill is required to be generated
Steps to Generate E-Way Bill
1) Part A of GST EWB-01 electronically generated by supplier/ recipient or transporter and

generation of unique number by system
2) Part B is generated by transporter/ supplier / recipient
3) Generation of E-Way Bill by GSTN with E-Way bill number, date and its validity period
Registration on E-Way Bill System
Consignor, consignee or transporter is required to get registered on the E-way bill system.
GSTIN needs to be filled to get OTP and then username and password gets generated.
Transporter is also required to register on EWB system.
E-way bill is to be generated by :

1) The registered consignor or consignee (if the transportation is being done in own/hired
conveyance or by railways by air or by vessel) or
2) The transporter (if the goods are handed over to a transporter for transportation by road).
Where neither the consignor nor consignee generates the E-way bill and the value of goods is
more than INR 50,000/- it shall be the responsibility of the transporter to generate it.
Note – EWB is generated only after information in Part A and Part B is filled.
E-way bill can be generated through various modes like Web (Online), Android app, SMS etc.
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Information in Part B – The transporter will upload the information after filling part B of form GST
EWB-01
On submission of information in part A and part B, a unique E-way bill no. will be generated by
system. This will be available to supplier, recipient and transporter on common portal.
If goods are transported by rail air or vessel – The EWB will indicate serial no. & date of railway
receipt, Air consignment note of bill of lading as the case may be
If goods are transported by Rail – Delivery of goods will be given only on production of E-way
bill.
More than 1 consignment in a vehicle

Separate EWB required for each consignment
Cancellation of E-way bill

The e-way bill can be cancelled within 24 hours from the time of generation only if either goods
are not transported or are not transported as per the details furnished in the e-way bill.
However transport details can be changed
Details of conveyance may not be furnished in Part-B

In case movement of goods upto 50 km distance:
from place of business of consignor to place of transporter for further transportation or
from place of transporter finally to place of the consignee.
Transfer of goods to another conveyance

In such cases, the transporter or generator of the e-way bill shall update the new vehicle number in
Part B of the EWB before such transfer and further movement of goods
The EWB can be assigned to another transporter for filling part B. however once part B is filled in
then EWB cannot be assigned
Consolidated E-way Bill in case of road transport

After e-way bill has been generated, where multiple consignments are intended to be transported
in one conveyance, the transporter may indicate the serial number of e-way bills generated in
respect of each such consignment electronically on the common portal and a consolidated e-way
bill in Form GST EWB-02 may be generated by him on the said common portal prior to the
movement of goods.
Validity period of E-way bill/consolidated E-way bill

Unique EWB number generated is valid for a period of 15 days for updation of Part B [Second
proviso to rule 138(9)].
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S. No. Distance within Country Validity period from relevant

date
1 Upto 100 km One day
2 For every 100 km or part One additional day

thereof thereafter
For Over Dimensional Cargo – For each 20 Km or part thereof – 1 day
If goods cannot be transported within validity of EWB, the transporter may generate another EWB
after updating the details in Part B of form GST EWB-01
EWB generated in one state is valid in all other states
Acceptance/rejection of e-way bill
If supplier or transporter generates EWB then information is communicated to recipient for his
acceptance.
Similarly if recipient or transporter generates EWB then it is communicated to the supplier for his
acceptance.
If the acceptance or rejection is not communicated within 72 hours from the time of generation of
e-way Bill or the time of delivery of goods whichever is earlier, it will be deemed that he has
accepted the details.
Documents/ devices to be carried by a person-in-charge of a conveyance
Invoice or bill of supply or delivery challan

Copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a
RFID** embedded on to the conveyance
RFID is Radio frequency identification device
Verification of documents and conveyances
Commissioner or an officer empowered by him in this behalf may authorise the proper officer to
intercept any conveyance to verify the e-way bill or the e-way bill number in physical form for all
inter-State and intra-State movement of goods.
Physical verification of a specific conveyance can also be carried out by any officer, on receipt of
specific information on evasion of tax, after obtaining necessary approval of the Commissioner or
an officer authorised by him in this behalf.
Inspection and verification of goods
A summary report of every inspection of goods in transit shall be recorded online on the common
portal by the proper officer within 24 hours of inspection and the final report shall be recorded
within 3 days of such inspection. Once physical verification of goods being transported on any
conveyance has been done during transit at one place within the State or in any other State, no
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further physical verification of the said conveyance shall be carried out again in the State, unless a
specific information relating to evasion of tax is made available subsequently. Where a vehicle has
been intercepted and detained for a period exceeding 30 minutes, the transporter may upload the
said information in on the common portal.
Goods carried without E-way bill – Penalty equal to tax is mandatory

If there is error in EWB or tax invoice penalty of 1000 is payable
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Chapter 10 Supply
How to check if GST is applicable:
Whether activity is a supply > If Yes > whether supply is covered in exemptions or in negative list
> No > Determine value of supply > Determine point of supply and GST liability > Make payment
of GST > Maintain GST records, file return
Also keep in mind provisions of reverse charge
Taxable even in GST is Supply of goods or services. Supply of anything other than goods or
services will not attract GST.
Actionable claim means a claim to any debt other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of movable property.
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Negative list of supply Section 7(2) – No GST
1) Services by an employee to the employer in the course of or in relation to his employment

(Amount paid for not joining a competing business would be liable to be taxed being paid
for providing the service of forbearance to act)
2) Services by any court or tribunal established under any law for the time being in force
3) Functions performed by members of – [Parliament, State legislature, Panchayats,

Municipalities, other local authorities] e.g. if MP gets consideration for singing a song then
it should be subject to GST.
4) Duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
5) Duties performed by any person as a Chairperson or a Member or a Director in a body

established by the Central Government or a State Government or local authority and who is
not deemed as an employee
6) Services of funeral, burial, crematorium or mortuary including transportation of the

deceased.
7) Sale of land or building – If any consideration for sale of building complex, civil structure or
part thereof is received before issuance of completion certificate or first occupation therein,
the entire consideration for such sale shall be liable to tax under GST as a supply of services
8) Actionable claims, other than lottery, betting and gambling
Definitions:
Consideration means (Similar to definition in Contract Act) – Anything received in return whether
monetary or non-monetary (to do something or not to do something) but it shall not include
subsidy received from government.
Deposit not treated as consideration unless it is used to be applied as consideration of the said
supply.
Person includes – Individual, HUF, AOP, BOI, Firm/LLP, Company, body corporate, Local authority,
society, Central and state government, corporation established under central/state/provisional act,
trust, artificial juridical person
Related person – already done in value of supply
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Taxable territory – India means - Territory of India as defined in article 1of constitution, territorial
waters, sea bed and subsoil below waters, continental shelf, exclusive economic zone, airspace
above territory and territorial waters.
Types of supply
Individual supply – When goods or services supplied can be clearly identified and can be
subjected to a particular rate of GST then such supply is called individual supply.
Composite supply Section – Goods/services are generally sold in combination (naturally bundled
in course of business) and one of which is a principal supply – rate of GST as applicable to principal
supply will be applicable to the whole value of supply
E.g. Customer buys a TV and gets warranty & maintenance then it is composite supply where
principal activity is supply of TV.
E.g. Hotel provides accommodation service together with facility of breakfast then these are
naturally bundled supply in ordinary course of business – principal supply is supply of service
(hotel accommodation)
Mixed supply – Comprising of 2 or more supplies which can be separated but sold together at a
single price –Highest rate applicable among the rates applicable on goods/service supplied would
be applicable to whole value. E.g. Package sold consisting of sweets, chocolates, cakes, fruit juice –
at a single price. Each of them can be supplied separately
Supply Section 7
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Section 7(1)(a) Meaning of Supply
Supply includes following made or agreed to be made for a consideration by a person in

course or furtherance of business
1) Sale and Transfer

2) Barter and Exchange – Barter includes exchange of goods/services while exchange may
cover a situation where goods are partly paid in goods and partly in money.
3) Licence, lease, rental with or without transfer of right to use
4) Disposal
Any transaction involving supply of goods and/or services without consideration is not a supply
unless it is deemed to be a supply under law [In Schedule I]
In course or furtherance of business - R buys a car for his personal use and after a year sells it to
a car dealer. Sale of car by R to car dealer is not a supply under CGST Act because supply is not
made in the course or furtherance of business.
There is one exception to “course or furtherance of business” rule i.e., import of services for a
consideration.
Section 7(1)(b) Importation of services for a consideration whether or not in course or

furtherance of business
E.g. Mr A has taken architectural services from New York without any consideration – no
consideration not liable to GST.
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Section 7(1)(c) Deemed Supply Even If Made Without Consideration
1) Permanent transfer or disposal of business assets made by any entity where ITC has been
availed on such assets. E.g. ABC & Co. donates old laptops to Charitable Schools when new
laptops are purchased by business will qualify as supply provided input tax credit has been
availed by ABC & Co. on such laptops
2) Supply between related person (already done in value of supply) or distinct persons (where
a person has more than 1 registration then in respect of each registration be treated as
distinct person). E.g. Gifts not exceeding 50,000 in value in a financial year by an employer
to an employee (related person) shall not be treated as supply of goods or services or both.
E.g. Stock transfer between 2 locations (having different GST registrations) of same entity
would attract GST
3) Supply of goods by a principal to his agent where agent undertakes to supply such goods
on behalf of principal or
By agent to principal where agent undertakes to receive such goods on behalf of principal.
E.g. A ltd engage R motors as an agent to sell cars on his behalf. For this purpose, A Ltd.
supplied 10 cars to the showroom of R motors located in Delhi. Supply of cars to agent will
qualify as supply.
4) Import of services by a taxable person from a related person or from his establishments
located outside India, without consideration, in the course or furtherance of business shall
be treated as “supply”.
That means import of service with consideration is covered u/s 7(1)(b) and import of service
without consideration from related/distinct person in course or furtherance of business is covered
u/s 7(1)(c).
Other import services not covered above are not taxable.
Schedule II Section 7(1A) Activities/transactions to be treated as supply of goods

(SOG) or supply of service (SOS)
Transfer
Transfer of any title of goods – SOG
Any transfer of title in goods under an agreement which stipulates that property in goods shall
pass at a future date upon payment of full consideration – SOG
Any transfer of right in goods or of undivided share in goods without the transfer of title – SOS
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Land & Building
Any lease, tenancy, easement, license to occupy land – SOS
Any lease or letting out of building including a commercial industrial or residential complex for
business or commerce either wholly or partly – SOS
Treatment or process - Applied to another person’s goods (job work - dying of cloth ) – SOS
Transfer of business assets
Goods forming part of business assets are transferred or disposed of whether or not for
consideration – SOG
Goods held/used for business are put to private use or are made available to any person for use
for any purpose other than business whether or not for consideration – SOS
Deemed SOG - Goods forming part of business assets carried on by a person who ceases to be a
taxable person, shall be deemed to be supplied by him, in the course or furtherance of his
business, immediately before he ceases to be a taxable person
However this will not include – business transferred on going concern to another person or
business is carried on by a persona representative who is deemed to be a taxable person
Supply of service
Renting of immovable property
Construction of complex, building, civil structure, etc. except where entire consideration is received
after issuance of completion certificate or after its first occupation whichever is earlier
Temporary transfer or permitting use or enjoyment of any intellectual property right
Development, design, programming, customization, adaptation, up gradation, enhancement,

implementation of IT software. If pre developed software is supplied then it will be SOG
Agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act.
Transfer of right to use any goods for any purpose
Composite supplies – SOS

Work contract service
Supply food/drink or any other article for human consumption (other than alcoholic liquor for
human consumption)
Supply of goods by AOP/BOI to its members for cash, deferred payment or other valuable
consideration – SOG
Page | 82

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CA/CS/CMA Intermediate Goods & Services Tax Notes by CA Yogesh Verma

Goods & Services Tax Notes

About the Author –

Prior to entering into teaching industry – he has

For CA Intermediate Taxation Video Lectures – Visit Learnzup.com (Free account

Position Before GST

*Intra state supply means supply within same state

*Interstate supply means from one state to another

Particulars Amount (INR)

Sale price 6750

What is input tax credit

In above example Mr B purchased a component of AC to manufacture an air conditioner.

Total VAT to state govt. 112 + 338 = 450

Following Articles of our constitution amended are as follows:

Other Articles of our constitution states the following:

What is GST Council - Article 279A

What is Goods And Services Network – GSTN

It is a non-profit organisation (section 8 company – Private Limited). It was formed to provide IT

Electronic portal www.gst.gov.in is managed by GSTN

Goods and Services Tax (Compensation to states) Act, 2017

Motor cycle > 350cc – 3% cess

1) Creating India as a unified national market

Let’s Understand GST

Section 9 is the charging section for CGST

Intra state supply of goods (Section 8(1) of CGST Act, 2017)

1) SS of goods to/by SEZ unit or SEZ developer

Intra state supply of services (Section 8(2) – CGST Act, 2017)

IGST Act, 2017

Supply of goods by Mr A to Mr B – Intra-State Supply

Now Supply of goods by Mr B to Mr C – Intra State Supply

Now Mr B will deposit the tax as follows:

Revenue earned by Govt.

Central Govt. – 1800 + 450 = 2250

State Govt. – 1800 + 450 = 2250

Assume in above example Mr B is located in Pune

Then goods sold by A to B – Inter State Supply

Mr A will deposit IGST collected to central govt.

In which order to adjust Input Tax Credit

SGST Credit CGST Credit IGST Credit

SGST payable CGST payable IGST payable

Assume Mr C is located in Mumbai Intra State Supply

Mr B will pay CGST = 2250 (Collected on sale) – 2250 (IGST credit) = 0

How much money Central and state government will get –

In the above example

Important note – Self supply also subject to GST

Sr. No. Particulars Value of Supply

GST Rates (Not in syllabus)

0.1% - Supply of goods to merchant exporter for export

0.25% - Rough diamonds, rough precious or semi-precious stones

Lottery– organized by state government – rate is 12%

28% - Accommodation in hotels including 5 star – cost of room > = 5000

Chapter 2 Value of Supply

Transaction value (TV) = Value of supply

Meaning of related person [Explanation to section 15]

Value of Supply includes the following Section 15(2)

Value of supply does not include Section 15(3)

Particulars Amount (INR)

Determine the value of taxable supply made by A Ltd. (Study Material)

Solution Computation of value of taxable supply

Particulars Amount (INR)

Particulars Amount (INR)

terms of section 15(2)(d)

CGST @ 10% 53500