UNIT -6 PROCEDURE AND
LEVY OF GST
Registration under GST
• The GST Act provides that every supplier of goods or services or both
who has an aggregate turnover of more than Rs. 20 lakhs in a year (Rs.10
lakhs in Special Category States) have to obtain GST registration. If the
supplier is only supplying goods, then threshold limit is Rs. 40 lakhs in a
year (Rs.20 lakhs in Special Category States) subject to the condition that
State has opted for this higher threshold limit. However, there are certain
categories of suppliers who are required to obtain mandatory registration
irrespective of their turnover limit.
Mandatory Registration under GST
• Person making interstate supplies
• casual taxable persons
• Persons who are required to pay tax under RCM
• Person who are required to pay tax under sub-section (5) of section 9
• Non-resident taxable persons making taxable supply
• Persons who are required to deduct tax under section 51
Mandatory Registration under GST
• Persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise
• Input Service Distributor
• Persons who supply goods or services or both, other than supplies specified under sub-section (5)
of section 9, through such electronic commerce operator who is required to collect tax at source
under section 52
• Every E-commerce operator
• Every person supplying OIDR services from a place outside India to a person in India, other than
a registered person
• Notified Persons
Persons not required to obtain GST
Registration
• an agriculturist, to the extent of supply of produce out of cultivation of
land
• Person making supplies of goods or services that are not liable to tax
under GST or wholly exempt under GST.
• Individual advocates (including senior advocates)
• Individual sponsorship service providers (including players)
Latest Amendment regarding E-
Commerce Operator Registration
• Earlier Registered persons engaged in intra state supply of goods through
Electronic Commerce Operators could not opt to pay tax under the
composition scheme.
• Now, section 10 has been proposed to be amended to allow the registered
person supplying goods within the state through E commerce operator to
opt for the composition scheme provided the aggregate turnover in the
preceding financial year does not exceeds ` 50 lakhs.
Types of GST Registration
Composition Scheme
The Composition levy scheme is a very simple, hassle free compliance. It is a voluntary and
optional scheme. This scheme is for small taxpayers whose turnover is less than 1.5 crore in
case of supplier of goods (75 lakhs in case of North Eastern States) and 50 lakhs in case of
supplier of services. The following persons shall not be eligible to take composition scheme:
• a) Manufacturer of ice cream, pan masala, or tobacco
• b) Person making inter-state supplies
• c) Casual taxable person or non-resident taxable person
• d) Supplier supplying goods through an e-commerce operator
Types of GST Registration
Regular Scheme
If a person who is not eligible or not willing to opt for composition scheme
has to opt for regular scheme.
Calculation of Aggregate Turnover
For the purpose of registration, where turnover limit applies, one has to calculate the aggregate
turnover during the year. The Aggregate Turnover of the year shall be sum of following:
1. Value of all taxable supplies
2. Value of all exempt supplies
3. Value of export supplies
4. Value of inter-state supplies
5. Turnover of all entities of a person under same PAN(aggregated on an All India Basis).
Aggregate Turnover shall not include value of any inward supply on which tax is liable to be
paid by a person on reverse charge basis. Turnover shall also not include GST paid on any
supply.
Voluntary Registration
If a person whose annual turnover is below the threshold limit or not liable to
take mandatory registration may apply for GST registration voluntarily.
Deemed Registration
• The grant of registration or the Unique Identity Number under the State
Goods and Services Tax Act or the Union Territory Goods and Services
Tax Act shall be deemed to be a grant of registration or the Unique
Identity Number under this Act subject to the condition that the
application for registration or the Unique Identity Number has not been
rejected under this Act within the time specified in sub-section (10) of
section 25
Deemed Registration
• Notwithstanding anything contained in sub-section (10) of section 25, any
rejection of application for registration or the Unique Identity Number
under the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act shall be deemed to be a rejection of application for
registration under this Act.
Special Provisions related to casual taxable
person and non-resident taxable person
• The certificate of registration issued to a casual taxable person or a non-
resident taxable person shall be valid for a period specified in the
application for registration or ninety days from the effective date of
registration, whichever is earlier and such person shall make taxable
supplies only after the issuance of the certificate of registration: Provided
that the proper officer may, on sufficient cause being shown by the said
taxable person, extend the said period of ninety days by a further period
not exceeding ninety days.
Special Provisions related to casual taxable
person and non-resident taxable person
A casual taxable person or a non-resident taxable person shall, at the time of
submission of application for registration under sub-section (1) of section
25, make an advance deposit of tax in an amount equivalent to the estimated
tax liability of such person for the period for which the registration is
sought: Provided that where any extension of time is sought under sub-
section (1), such taxable person shall deposit an additional amount of tax
equivalent to the estimated tax liability of such person for the period for
which the extension is sought.
Special Provisions related to casual taxable
person and non-resident taxable person
• The amount deposited under sub-section (2) shall be credited to the
electronic cash ledger of such person and shall be utilized in the manner
provided under section 49.
GST REGISTRATION PROCESS
Proper Officer shall grant registration certificate in FORM GST REG 06
Exempted Goods and Services under GST
Exempted Goods Exempted Services
• Fresh and dry vegetables like potatoes, onions, and other Agricultural services, including harvesting, packaging, warehouse,
leguminous vegetables. cultivation, supply, leasing of machinery, are essentially GST exempt
• Non-GST goods include fish, egg, fresh milk, etc. services. An exception to these exempted services includes the rearing
of horses
• Grapes, melons, ginger, garlic, unroasted coffee beans,
green tea leaves that are not processed, and more. Public transportation services, auto-rickshaws, metered cabs, metro,
etc. Transportation of agricultural products and goods outside of India.
• Food items that are not put into branded containers like
rice, hulled cereal grains, wheat, corn, etc. Labour supply for farms. Goods transportation where the charges are
• Components like human blood. less than Rs.1500. Services like retail packing, pre-conditioning,
waxing, etc. Foreign diplomatic and government services.
• Unspun jute fibres, raw silk, khadi fibre, etc.
Healthcare and educational services and charity services also
• Hearing aid manufacturing parts, chalks, slates,
qualify for exemption under GST.
handloom, etc.
Services offered by RBI, IRDAI, Central and State Government,
NPS and more. Banking services like Basic Saving Bank Deposit
(BSBD) account operable under the Pradhan Mantri Jan-Dhan Yojana
(PMJDY).
GST Rates
Meaning and Scope of Supply
• While these six parameters describe the concept of supply, there are a few
exceptions to the requirement of supply being made for a consideration
and in the course or furtherance of business.
• Any transaction involving supply of goods or services without
consideration is not a supply, barring few exceptions, in which a
transaction is deemed to be a supply even without consideration.
• Further import of services for a consideration, whether or not in the
course or furtherance of business is treated as supply.
Supply of Goods and Services or Both
• The securities are excluded from the definition of goods as well as that
of services.
• Money is also excluded from the definition of goods as well as services,
however, activities relating to the use of money or its conversion by
cash or by any other mode, from one form, currency or denomination,
to another form, currency or denomination for which a separate
consideration is charged are included in services.
Supply of Goods and Services or Both
• Schedule III to the CGST Act, 2017 spells out activities which shall be
treated as neither supply of goods nor supply of services – in other words,
outside the scope of GST
• Services by an employee to the employer in the course of or in relation to his
employment.
• Services of funeral, burial, crematorium or mortuary including transportation of the
deceased.
• Sale of land and, sale of building where the entire consideration has been received
after completion certificate is issued or after its first occupation.
Supply for Consideration
• Consideration has specifically been defined in the CGST Act, 2017. It can
be in money or kind.
• Any subsidy given by the Central Government or a State Government
is not considered as consideration.
• It is immaterial whether the payment is made by the recipient or by
any other person.
Supply for Consideration
• A deposit given in respect of the supply of goods or services or both
shall not be considered as payment made for such supply unless the
supplier applies such deposit as consideration for the said supply;
• Further, when there is barter of goods of services, the same activity
constitutes supply as well as a consideration.
Supply without Consideration
• Permanent transfer or disposal of business assets where input tax credit has been availed on
such assets.
• Supply of goods or services or both between related persons or between distinct persons as specified
in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding
fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated
as supply of goods or services or both.
• Supply of goods— (a) by a principal to his agent where the agent undertakes to supply such
goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes
to receive such goods on behalf of the principal.
• Import of services by a taxable person from a related person or from any of his other
establishments outside India, in the course or furtherance of business
Supply in the course of furtherance of
business
• GST is essentially tax only on commercial transactions. Hence only those
supplies that are in the course or furtherance of business qualify as
Supply under GST.
• Hence any supplies made by an individual in his personal capacity do
not come under the ambit of GST unless they fall within the definition of
business as defined in the Act.
• Sale of old gold jewellery by an individual to a jeweler will not constitute
supply as the same cannot be said to be in the course or furtherance of
business of the individual.
Supply in the course of furtherance of
business
• Sale of goods or service even as a vocation is a supply under GST.
• Therefore, even if a famous politician paints paintings for charity and sells
the paintings even as a one-time occurrence, the sale would constitute
Supply.
• However, there is one exception to this ‘Course or Furtherance of
Business’ rule i.e., import of services for a consideration.
Supply by a taxable person
• A supply to attract GST should be made by a taxable person.
• A supply to attract GST should be made by a taxable person. Hence a supply
between two non-taxable persons does not constitute supply under GST.
• A “taxable person” is a person who is registered or liable to be registered
under section 22 or section 24.
• Hence even an unregistered person who is liable to be registered is a taxable
person. Similarly, a person not liable to be registered but has taken voluntary
registration and got himself registered is also a taxable person.
Taxable Supply
• For a supply to attract GST the supply must be taxable. Taxable supply
has been broadly defined and means any supply of goods or services or
both which is leviable to tax under the Act.
• Exemptions may be provided to the specified goods or services or to a
specified category of persons / entities making supply
Supply in the Taxable Territory
• For a supply to attract GST the place of supply should be in India except
the state of Jammu and Kashmir.
• The place of supply of any goods or services is determined based on
Sections 10, 11, 12 and 13 of IGST Act 2017.
Inter/Intra State Supply
• Inter – State supply of goods means a supply of goods where the location
of the supplier and place of supply are in different States or Union
territories.
• Intra State supply of goods means supply of goods where the location of
the supplier and place of supply are in the same State or Union territory.
• Imports, Supplies from and to SEZs are treated as deemed inter-State
supplies
Composite/Mixed Supply
• A composite supply means a supply made by a taxable person to a recipient
comprising two or more supplies of goods or services or any combination
thereof, which are naturally bundled and supplied in conjunction with each
other in the ordinary course of business, one of which is a principal supply.
• For instance, a travel ticket from Mumbai to Delhi may include service of food
being served on board, free insurance, use of airport lounge.
• In this case, transport of passenger, constitutes the pre-dominant element of the
composite supply, and is treated as the principal supply and all other supplies
are ancillary
Time of Supply of Goods under GST
Explained
• It means the point in time when goods have been deemed to be supplied or
services have been deemed to be provided for determining when the
taxpayer is liable to pay taxes.
Time of Supply under Normal Charge
The time of supply of goods shall be the earlier of the following dates:
• (a) The date of issuing of invoice (or the last day by which invoice should
have been issued) OR
• (b) The date of receipt of payment
Time of Supply under Normal Charge
If the supplier receives an amount up to Rs.1,000 in excess of the invoice amount, the time of
supply for the extra amount shall be the date of issue of invoice (at the option of the supplier).
For (a) and (b)- The supply shall be assumed to have been made to the extent it is covered by
the invoice or the payment (as the case may be).
For (b)- the date of receipt of payment shall be earlier of-
1. The date on which he entered the payment in his books
OR
2. The date on which the payment is credited to his bank account
Time of Supply under reverse charge
Reverse charge means the liability to pay tax is by the recipient of goods/services instead of the
supplier. In case of reverse charge, the time of supply shall be the earliest of the following dates
—
(a) the date of receipt of goods
OR
(b) the date of payment
OR
(c) the date immediately after THIRTY days from the date of issue of invoice by the supplier (60
days for services).
Time of Supply under reverse charge
If it is not possible to determine the time of supply under (a), (b) or (c), the
time of supply shall be the date of entry in the books of account of the
recipient.
Notes:
For clause (b)- the date of payment shall be earlier of-
The date on which the recipient entered the payment in his books OR
The date on which the payment is debited from his bank account
Time of Supply for Vouchers
In case of supply of vouchers the time of supply is-
(a) The date of issue of the voucher, if the supply can be identified at that
point.
OR
(b) The date of redemption of the voucher, in all other cases.
When time of supply cannot be determined
If it is not possible to determine the time of supply by the above provisions,
then it will be-
(a) The date on which a periodical return has to be filed
OR
(b) The date on which the CGST/SGST is paid, in any other case.
Determination of time of supply under
services
The time of supply of services shall be the earlier of the following dates:
(a) If invoice is issued within the period prescribed*, The date of issuing invoice OR
The date of receipt of payment -whichever is earlier
(b) If invoice is NOT issued within the period prescribed*, The date of provision of
service OR The date of receipt of payment – whichever is earlier
(c) Where the provisions of clause (a) or (b) do not apply, The date on which the
recipient shows the receipt of services in his books of account *before the provision of
service, or within 30 days after the provision of service, as per invoice rules (other than
insurance or banking companies, or financial institutions).
Determination of time of supply under
services
If the supplier of taxable service receives an amount up to Rs. 1000 rupees
in excess of invoice amount, the time of supply for the extra amount shall be
the date of issue of invoice (at the option of the supplier).
For clauses (a) and (b)-
(i) The supply shall be assumed to have been made to the extent it is covered
by the invoice or the payment (as the case may be).
(ii) The date of receipt of payment shall be earlier of- -The date on which he
entered the payment in his books
Supply under Reverse Charge
In case of reverse charge, the time of supply shall be the earliest of the following dates—
(a) The date of payment OR
(b) The date immediately after SIXTY (60) days from the date of issue of invoice by the
supplier (30 days for goods) If it is not possible to determine the time of supply under
(a), (b) or (c), the time of supply shall be the date of entry in the books of account of
the receiver of service.
(c) For clause (a)- the date of payment shall be earlier of- 1. The date on which the
recipient entered the payment in his books OR 2. The date on which the payment is
debited from his bank account
Supplier is located outside India
(a) the date of entry in the books of account of the receiver OR
(b) The date of payment -whichever is earlier
Supply of Vouchers
In case of supply of vouchers, the time of supply is-
(a) The date of issue of voucher, if the supply can be identified at that point
OR
(b) The date of redemption of voucher, in all other cases
Time of Supply cannot be determined
1. The date on which a periodical return has to be filed
OR
2. The date on which the CGST/SGST is paid, in any other case.
Place of Supply – No Movement of Goods
Supply Type Place of Supply
Location of those goods at the time of
No movement of goods, either by the
delivery to the recipient (at the time of
supplier or by the recipient
ownership transfer)
Goods are assembled or installed at site Place of installation or assembly
Place of Supply – Goods supplied on a
vessel/conveyance
Supply Type Place of Supply
Goods are on board of a conveyance or Location at which such goods are taken on
vessel or train or aircraft or a motor vehicle board.
Place of Supply – Imports and Exports
Supply Type Place of Supply GST
Always IGST is charged for
Goods imported into India Location of the importer
imports
GST on exports are eligible
Exported from India Location outside India
for refund
Location of Supplier of Services
Location of Recipient of Services
Place of Supply of Services – General
Provisions
Place of Supply of Services – Specific Provisions
Input Tax Credit
• As per sec 2 (62) of CGST Act,2017, Input tax means
IGST/CGST/SGST/UTGST charged on any supply of goods or services which
are used / intended to be used in the course or furtherance of business and
includes tax payable under Reverse Charge Mechanism (RCM)
Who can avail ITC?
• Section 16 deals with availment of ITC in respect of taxes paid. As per the
said section, every registered person under this act can avail ITC except in
case of
• 1. Composition dealer or
• 2. Supplier engaged in supply of exempted, Nil rated goods
• or 3. Unregistered person.
Conditions to avail ITC
• Goods or services or both must be received
• Tax charged on such supply should be paid to government
• There must be a proper documentary evidence to avail ITC viz., Tax
invoice, debit note or any other document as per Rule 36. Under rule 36 of
CGST Rules, 2017, the following particulars shall be mentioned: a.
Taxable value b. Tax Rate c. Description of goods or services d. GSTIN of
supplier and Recipient e. Place of supply in case of inter-State supply
• GST returns in respect of such supply must be filed within specified time
Specific Restrictions
Input tax credit shall not be available in respect of the following namely:
a. Motor vehicles for transportation with 13 or more persons capacity
(including the driver)
b. General Insurance and related services, service, repairs and maintenance
relating to motor vehicles, vessels or aircraft.
ITC Mechanism
Apportionment of ITC
Determination of ITC for Capital goods
ITC Reversal Computation
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