India's Leading Goods And Services Tax Consultancy Service Provider Dedicated to Entrepreneur to Start Their Business.


What is GST/ Concept of GST

GST is an Indirect tax. It is a destination based tax on Consumption of goods and services. It is levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In other words only value addition will be taxed and burden of tax is to be borne by the final consumer.

When Goods And Services Tax (GST) Registration will applicable?

Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds Fourty (40) lakh rupees. (Earlier it was 20 lakh respectively). Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds twenty (20) lakh rupees from April 1, 2019 (Earlier it was 10 lakh respectively)

Which Benefit will avail after GST Registration?

-Every person who registered under GST will legally recognize as supplier of goods or services.

-The registered person who maintain the proper accounting of taxes paid on the input goods or services which can be utilized for payment of GST due on supply of goods or services or both by the business.

- The registered person legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.

-Getting eligible to avail various other benefits and privileges rendered under the GST laws.

What are consequences for non-registration under GST?

Where a person is not registered under the GST regime:

-He cannot collect GST from his customers

-Cannot claim any input tax credit of GST paid by him

1. What is Input Tax Credit?

“Input Tax Credit” means the credit of input tax

In the previous tax system, there was non availability of credit at various points in supply chain, leading to a cascading effect of tax i.e., tax on tax and therefore increasing the cost of goods and services.

Tax paid for inputs, that is for inward taxable supplies, is called input tax and the recipient is entitled to the credit of the same, which is called Input Tax Credit (ITC).

2. Composition Scheme:

-What is composition Scheme:

Composition scheme gives an option to small businesses under which they can opt to pay a fixed percentage of turnover as TAX in lieu of Normal Tax and be relieved from the detailed compliance of the GST law.

- Who can opt for Composition Scheme:

REGISTERED PERSON, whose AGGREGATE TURNOVER in the preceding financial year did not exceed ONE CRORES (LIMIT INCREASED TO 1.50 CRORES RUPEES but for which an amendment in the act is required firstly to increase the limit to Rs 2 crore and thereafter a notification will be required after that only the new limit will be applicable), MAY Announced that the higher turnover cap of Rs 1.5 crore for availing composition scheme of paying 1 per cent tax will be effective from April 1.

- Who cannot opt for Composition Scheme:

Following dealers are not allowed to opt for composition scheme:/p>

1. Supplier of services other than restaurant related services (but restaurant serving alcohol are not allowed to opt for composition scheme)

2. Supplier supplying exempt supplies.

3. Suppliers making interstate outward supplies of goods.

4. Suppliers engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source.

5. A registered Person engaged in manufacturing of such goods as may be notified by the Government on the recommendations of the Council. The following goods have been hereby notified -

    a. Ice cream and other edible ice, whether or not containing cocoa

    b. Pan masala

    c. All goods, i.e. Tobacco and manufactured tobacco substitutes

6. Supplier registered as casual taxable person or non-resident taxable person

7. All registered persons having the same Permanent Account Number (PAN) have to opt for composition scheme. If one such registered person opts for normal scheme, others become ineligible for composition scheme.

- Which rate is applicable for restaurant Business?

Restaurants whose aggregate turnover is less than Rs 1 crore can avail the benefits of “composition scheme” under section 10 of CGST Act, 2017. With this scheme, only 5% GST will be levied on the supply breaking-up into 2.5% CGST and 2.5% SGST.

This is the only service which has been brought under composition scheme. Otherwise composition scheme is available to traders and small manufacturers only.

- Which rates are applicable in case of opting Composition Scheme?

Cateogory Of Tax Payer CGST SGST Total:

Manufacturer of Goods 0.5% 0.5% 1.0%
Trader of Goods 0.5% 0.5% 1.0%
Restaurants (Not Serving Alcohol) 0.5% 0.5% 1.0%

The above rates have been reduced with effect from 01.01.2018 vide notification no. 03/2018 dated 23.01.2018. (Earlier the CGST rate for manufacturer was 1%)

- What are Advantages and Disadvantages of Composition Scheme:

1. Advantages of Composition Scheme:

- Lesser compliance (returns, maintaining books of record, issuance of invoices)

- Limited tax liability

- High liquidity as taxes are at a lower rate

- Single Return, i.e. only one Return is required to be filed instead of three returns as required to be filed by normal tax payer

2. Disadvantages of Composition Scheme:

- A limited territory of business. The dealer is barred from carrying out inter-state transactions.

- No Input Tax Credit available to composition dealers as well as the person who is purchasing goods from composition dealer.

- The taxpayer will not be eligible to supply exempt goods or goods through an e-commerce portal.

3. What is Role of GST under Import And Export?

- GST under Imports:

Import of goods as bringing commodities from overseas into India. As such, all imports are considered as inter-state supplies. IGST will be applicable to all imported goods along with custom duties as applicable.

1. Import of Goods:

All these additional custom duties will be subsumed by GST.

2. Import of Services:

The import of services is defined as the supply of a service by a supplier, who is based outside the company, but the recipient of the services is based in India, and the place at which the service is supplied is also within the geographical boundaries of the country.

- Impact of GST on Imports

In case a commodity attracts IGST, but does not attract any Countervailing Duty, if the Assessable Value of the commodity inclusive of landing charges is Rs.500, IGST is levied at 12%, Basic Customs Duty is levied at 10%, Education Cess is levied at 2% and Higher Education Cess is levied at 1%, the calculation of duty will be:

BCD = 10% of Assessable Value (10% of Rs.500) = Rs.50

Education Cess = 2% of BCD (2% of Rs.50) = Re.1

Higher Education Cess = 1% of BCD (1% OF Rs.50) = Rs.0.50

IGST = 12% of (Assessable Value + BCD + Education Cess + Higher Education Cess) = Rs.66.18

- GST under Exports:

- How are Exports treated under GST Law?

Under the GST Law, export of goods or services has been treated as:

- Inter-State supply and covered under the IGST Act. Export is treated as Inter-state supply under GST and IGST is charge on export.

- Treatment of Exports under GST

As per the provisions contained under IGST law, export of goods or services or both are to be regarded as “zero-rated supplies” and a person being a registered taxable person exporting such goods or services or both shall be allowed to claim the refund of the GST paid under one of the following two options:

- Export of goods or services or both under bond or letter of undertaking (LUT) without paying any Integrated Tax and can claim the refund of unutilized input credit.

- Export of goods and service or both on the payment of Integrated Tax and the exporter can claim the refund of the GST paid on such goods and services so exported. The above-mentioned refunds will be subject to certain rules, procedures, and safeguards as may be prescribed.

4. Tax Invoice, Debit and Credit Note?

“Tax Invoice” is issued when a registered person makes a taxable supply.

Tax invoice broadly contains details like description, quantity, value of goods/service, tax charged thereon and other particulars as may be prescribed. Tax invoice is a primary evidence for recipient to claim input tax credit of goods & service. The time limit to issue of tax invoice as described in following manner:

“Credit Note” means a document issued by a registered person ,where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed.

“Debit Note” means a document issued by a registered person, where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed.

5. E-way Bill:

- What is an e-way bill?

E-way bill is a document required to be carried by a person in charge of the conveyance carrying any consignment of goods of value exceeding fifty thousand rupees as mandated by the Government in terms of Section 68 of the Goods and Services Tax Act read with Rule 138 of the rules framed thereunder. It is generated from the GST Common Portal for e-way bill system by the registered persons or transporters who cause movement of goods of consignment before commencement of such movement.

- When E-Way Bill required:

Every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees –

i. In relation to a supply; or

ii. For reasons other than supply; or

iii. Due to inward supply from an unregistered person, shall, before commencement of such movement,

furnish information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number will be generated on the said portal:

The transporter, on an authorization received from the registered person, may furnish information in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number will be generated on the said portal

- Is there any validity period for e-way bill?

Yes. Validity of the e-way bill depends upon the distance the goods have to be transported. For regular vehicle or transportation modes, for every 100 KMs or part of its movement in single day has been provided. In case of Over Dimensional Cargo vehicles, for every 20 KMs or part of its movement, one day validity is provided and this validity expires on the midnight of last day.

- Can the e-way bill be deleted or cancelled?

The e-way bill once generated cannot be deleted. However, the person who generated the e-way bill can be cancelled within 24 hours of generation. If a particular EWB has been verified by the proper officer, then it cannot be cancelled. Further, e-way bill can be cancelled if either goods are not transported or are not transported as per the details furnished in the e-way bill.

- What is a GTA?

The “goods transport agency” or GTA means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. This means, while others might also hire out vehicles for purpose of goods transportation, only those issuing a consignment note are considered as a GTA.

-What is a consignment note?

A consignment note is a document issued by a goods transportation agency against the receipt of goods for the purpose of transporting the goods by road in a goods carriage. If a consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency. If a consignment note is issued, it means that the lien on the goods has been transferred to the transporter. Now the transporter is responsible for the goods till its safe delivery to the consignee.

A consignment note is serially numbered and contains –

    Name of consignor

    Name of consignee

    Registration number of the goods carriage in which the goods are transported

    Details of the goods

    Place of origin

    Place of destination.

    Person liable to pay GST – consignor, consignee, or the GTA.

- Reverse Charge if the GTA Is Unregistered

In case, Intra-state supplies of services or both received by a registered person from any unregistered supplier, was exempted from GST if it does not exceed Rs. 5,000 in a day. However, the Government has cancelled the notification and hence, RCM applies on unregistered purchases for only specified list of supplies, which is yet to be notified.

6. Cancellation of Registration:

-What is meant by cancellation of registration?

Here, Cancellation of GST registration means that the taxpayer will not be a GST registered person any more.

I. In which cases taxpayer wish to cancel his registration?

    1. The business has been discontinued

    2. The business has been transferred fully, amalgamated, demerged or otherwise disposed —The transferee (or the new company from amalgamation/ demerger) has to get registered. The transferor will cancel its registration if it ceases to exist.

    3. There is a change in the constitution of the business.

II. Cancellation by tax officer:

    The registration can be cancel by officer, if the taxpayer-

    (a) Does not conduct any business from the declared place of business OR

    (b) Issues invoice or bill without supply of goods/services OR

    (c) Violates the anti-profiteering provisions.

7. Revocation and Cancellation of GST Registration:

- What is revocation of cancellation?

Revocation of cancellation of registration means that the decision to cancel the registration has been reversed and the registration is still valid.

- When is revocation of cancellation applicable?

Revocation of Cancellation applicable only when the tax officer has cancelled the registration of a taxable person on his own motion. Such taxable person can apply to the officer for revocation of cancellation within thirty days from the date of the cancellation order.