GST 101: A Bird's Eye View Of The Major Provisions of GST

As India moves towards one of its biggest indirect tax reform in history, let us attempt to get a bird’s eye view of some of the most important aspects of the Goods and Services Tax (GST).

1. The Goods and Services Tax will subsume most of the indirect taxes currently in place. The taxes to be subsumed include Excise Duty (on Manufacture), Sales Tax/VAT (on sale of goods) and Service Tax (on services).

2. GST will be applicable both on Goods as well as services. Goods have been defined to mean every kind of movable property other than money and securities; while Services have been defined to mean anything other than Goods, Money or Securities.


3. GST will primarily be a destination or a consumption based tax.

4. GST is a tax on the supply of goods and services.

5. “Supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.

6. Moreover, certain supplies (as mentioned in Schedule I of the GGST Act) made without a consideration also come within the ambit of GST.

7. Under GST, both the Central Government as well as the State Governments will have the power to levy GST.

8. Central GST or the CGST and State GST (SGST) will be levied, in case of intra-state supplies, by the Central Government and the concerned State Government respectively on a common tax base.

9. In case of inter-state supplies (including import and export of goods and services), an Integrated Goods and Service Tax (IGST) will be levied by the centre.

10. Generally, IGST rate will be equal to CGST Rate ‘plus’ SGST Rate.

11. There is also the UTGST or the Union Territory Goods and Services Tax which is similar to SGST.

12. Export of Goods means taking goods out of India to a place outside India.

13. Export of Services means the supply of any service when,––

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for the service has been received by the supplier of service in convertible foreign exchange; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person.

14. Import of Goods means bringing goods into India from a place outside India.

15. Import of Services means the supply of any service, where––

(i) the supplier of service is located outside India;

(ii) the recipient of service is located in India; and

(iii) the place of supply of service is in India;

16. Supplies to SEZ units and Export of goods and services are Zero-rated.

17. The liability to pay tax to the government in case of GST generally lies on the supplier of goods and services. However, in certain situations, the liability to pay tax lies on the recipient of service (known as the reverse charge mechanism). We will discuss this later on in this article.

18. “Time of Supply” provisions determine the point in time at which the liability to pay tax (i,e GST) arises.

TIME OF SUPPLY IN CASE OF GOODS

19. Time of supply in case of goods is the earliest of the date of issue of invoice (or the last day by which invoice should be issued) or the date of receipt of payment.

TIME OF SUPPLY IN CASE OF SERVICES

20. Time of supply in case of services, where an invoice is issued within the due date prescribed, is the earliest of the date of issue of invoice or the date of receipt of payment.

21. Time of supply in case of services, where an invoice is not issued within the due date prescribed, is the earliest of the date of provision of service or the date of receipt of payment.

DUE DATES FOR ISSUE OF INVOICE

22. Due date for the issue of invoice in case of goods, where the supply involves movement of goods is “on or before the removal of goods from the location of the supplier.”

23. Due date for the issue of invoice in case of goods, where supply does not involve the movement of goods is “on or before the date of delivery of the goods to the recipient.”

24. In case of services, the tax invoice is to be issued within 30 days from the date of supply of service.

PLACE OF SUPPLY

25. The “Place of Supply” is an important concept under GST which helps to determine whether a particular supply is an ‘Inter-state’ supply or an ‘Intra-state’ supply.

26. Where the ‘location of the supplier of goods or services’ and the ‘place of supply’ is within the same state, the same will be treated as an Intra-state supply and CGST and SGST will be applicable.

27. Where the ‘location of the supplier of goods or services’ and the ‘place of supply’ are in two different states, the same will be treated as an Inter-state supply and IGST will be applicable.

PLACE OF SUPPLY FOR GOODS (OTHER THAN IMPORT OR EXPORT OF GOODS)

28. The place of supply of goods, other than supply of goods imported into, or exported from India, shall be the location where the movement of goods terminates for delivery to the recipient. Where the supply does not involve movement of goods, the place of supply shall be the location of such goods at the time of the delivery to the recipient.

29. Moreover, in case the goods are shipped to an address which is different from the address at which the invoices are raised by the supplier, the place of supply shall be the location or the address at which the invoices are raised.

30. Where the goods are assembled or installed at site, the place of supply shall be the place or location of such installation or assembly.

31. Where the goods are supplied on board a conveyance, like a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board. Thus if goods are sold on board a flight, the place of supply in such cases will be the location where such goods are loaded on to the flight.

PLACE OF SUPPLY FOR GOODS (IN CASE OF IMPORT OR EXPORT OF GOODS)

32. The place of supply in case goods are imported into India shall be the location of the importer. Thus, such goods will be taxable under GST unless a specific exemption is available.

33. The place of supply in case of export of goods out of India shall be outside India. Export of goods is zero-rated under GST which effectively means that there is no tax on the export of goods.

PLACE OF SUPPLY OF SERVICES (WHERE LOCATION OF SUPPLIER AND LOCATION OF RECIPIENT IS IN INDIA)

34. Place of supply of services in case such supply is made to a person who has registration under GST (i.e a person with a GSTIN) is the location of such registered person. This is the general rule. There are however, exceptions to this rule which are outlined below.

35. Where supply of service is made to an unregistered person, the place of supply shall be the address of the unregistered person if the same is available. If such address is not available, the place of supply shall be the location of the provider/supplier of such service.

36. Supply of service directly in relation to an immovable property shall be the location of such immovable property. This includes the grant of rights to use the immovable property or services by way of providing accommodation at a hotel, guesthouse inn etc.

37. The place of supply in case of restaurant and catering services, personal grooming, fitness, beauty treatment and health service shall be the location where the services are actually performed.

38. The place of supply in relation to training and performance appraisal services provided to a registered person shall be the location of such registered person. In case such services are provided to an unregistered person, place of supply shall be the place where such services are actually performed.

39. The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place shall be the place where the event is actually held or where the park or such other place is located.

40. In case of Services provided by way of organisation of a fair or an event, the place of supply will be the location of registered person if such services are provided to a registered person. In case such services are provided to a unregistered person, the place of supply shall be the location of such event. However, where such services are provided to a unregistered person and the location of the event is outside India, the place of supply shall be the location of the recipient of such service.

41. The place of supply of services by way of transportation of goods, including by mail or courier, when such services are provided to a registered person, shall be the location of such person. In case services are provided to an unregistered person, the place of supply shall be the location at which such goods are handed over for their transportation.

42. The place of supply of passenger transportation service to a registered person, shall be the location of such person. Where such service is provided to an unregistered person, place of supply shall be the place where the passenger embarks on the conveyance.

43. The place of supply of services on board a conveyance shall be the location of the first scheduled point of departure of that conveyance for the journey.

44. The place of supply of banking and other financial services, including stock broking services shall be the location of the recipient of services. Where such location is not available, the place of supply shall be the location of the supplier of services.

45. The place of supply of insurance services shall be the location of the recipient of such services.

PLACE OF SUPPLY OF SERVICES (WHERE LOCATION OF SUPPLIER OR LOCATION OF RECIPIENT IS OUTSIDE INDIA)

46. The place of supply of services where the location of the recipient or the location of supplier is outside India is the location of the recipient of service. Where the location of recipient is not available, the place of supply shall be the place of the supplier of such service. This is the general rule to which there are some exceptions. These exceptions are outlined below.

47. The Place of supply of services in respect of goods which are required to be made physically available to the supplier of services shall be the location where the services are actually performed.

48. Note that services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, will not come under the purview of GST.

49. The place of supply of services supplied to an individual which require the physical presence of such individual, shall be the location where the services are actually provided/performed.

50. The place of supply of services supplied directly in relation to an immovable property including supply of accommodation by a hotel, inn, or guest house etc shall be the location of such immovable property.

51. The place of supply of services supplied by way of admission to, or organisation of an event or fair, shall be the place where the event is actually held.

52. In case of services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders the place of supply shall be the location of the supplier of service.

53. The place of supply in case of intermediary service shall be the location of the supplier of service.

54. The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods.

55. The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance.

56. The place of supply of services provided on board a conveyance during the course of a passenger transport operation shall be the first scheduled point of departure of that conveyance for the journey.

57. The place of supply of online information and database access or retrieval services shall be the location of the recipient of services.

INPUT TAX CREDIT (ITC)

58. A registered person is entitled to take credit of input tax paid on any supply of goods or services or both to him which are used or intended to be used in the course of his business. However there may be restrictions to availing ITC in respect of certain goods or services.

59. The following conditions must be satisfied for availing input tax credit: (a) the person must be in possession of a tax invoice/debit note. (b) He has received such goods or services on which he is claiming ITC. (c) The tax must actually have been paid by the supplier. (d) The person claiming ITC must have filed the prescribed returns.

60. Where the recipient (having availed ITC) has not paid to the supplier the value of such goods or services along with the tax payable within 180 days of the date of invoice, such ITC availed shall be reversed and interest shall be payable thereon. He will once again be entitled to avail such ITC once he has made payment to the supplier.

61. A person is eligible to take full credit of tax paid on capital goods acquired by him to be used in course or furtherance of his business.

62. However, where a registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on such tax component shall not be allowed.

UTILISATION OF INPUT TAX CREDIT

63. Credit of IGST paid on inputs, input services and capital goods can be utilized for payment of output liability of IGST, CGST, SGST/UTGST in the order mentioned.

64. Credit of CGST paid on inputs, input services and capital goods can be utilized for payment of output liability of CGST, IGST in the order mentioned.

65. Credit of SGST/UTGST paid on inputs, input services and capital goods can be utilized for payment of output liability of SGST/UTCST, IGST in the order mentioned.

ZERO RATED SUPPLIES

66. Note that Export of supplies (EOS) and supplies to SEZ units are treated as zero-rated in GST. Zero rated supplies are those where the tax rate is Zero.

67. Zero-rated supplies are considered to be inter-state supplies under GST.

68. Credit of input tax is available in respect of zero rated supplies.

69. A person making zero rated supplies is eligible to claim refund of input tax in the following ways : (a) supply goods or services under a bond or a letter of undertaking, without payment of GST, and claim refund of unutilized input tax credit; (b) supply goods or services on payment of IGST and claim refund of such tax paid.

REVERSE CHARGE MECHANISM

70. Under the reverse charge mechanism, in case of certain supplies, the liability to pay tax to the Government lies on the recipient of service.

71. The government has notified a list of services on which reverse charge is applicable. This list includes import of services.

72. Note that in respect of any purchases from an unregistered dealer, reverse charge will be applicable.

73. In case of reverse charge on goods, time of supply is the earliest of (a) date of receipt of goods (b) date of payment (c) date immediately following 30 days from the date of issue of invoice by the supplier of goods.

74. In case of reverse charge on services, time of supply is the earliest of (a) date of payment (b) date immediately following 60 days from the date of issue of invoice by the supplier of service.

RETURNS UNDER GST

75. Under GST, separate returns are to be filed for each GSTIN.

76. GSTR 1 is a monthly return relating to details of outward supplies of taxable goods and services effected during the previous month. It is to be filed by the 10th of the next month.

77. GSTR 2is a monthly return relating to details of inward supplies of taxable goods and services received during the previous month for which Input Tax Credit is claimed. It is to be filed by the 15th of the next month.

78. GSTR 3 is again a monthly return based on the finalised details of output and input supplies provided/received during the previous month. It is to be filed by the 20th of the next month along with the payment of tax.

79. GSTR 4 is a quarterly return to be filed by composition suppliers. It is to be filed by the 18th of the month succeeding each quarter.

80. GSTR 5 is a monthly return for non-resident taxable persons. It is to be filed by the 20th of each month.

81. GSTR 6 is a monthly return for Input Service Distributors. It is to be filed by the 13th of each month.

82. GSTR 7 is a monthly return for persons responsible for deducting tax at source under GST. It is to be filed by the 10th of each month.

83. GSRT 8 is a monthly return to be filed by an ecommerce operator which includes of tax collected at source. It is to be filed by the 10th of each month.

84. GSRT 9 is the annual return for taxable persons and is to be filed by the 31st December of the financial year following the year in which the supplies are made.

85. GSTR 10 is the final return to be filed by a person whose registration under GST is being cancelled or surrendered and is to be filed within 3 months of the date of cancellation or the date of cancellation order whichever is earlier.

86. GSTR 11 is the Inward supplies statement for a person having a Unique identification number for claiming refund of input tax. The form is to be furnished by 28th of the month following the month for which statement is filed.
GST 101: A Bird's Eye View Of The Major Provisions of GST GST 101: A Bird's Eye View Of The Major Provisions of GST Reviewed by Sandipan Chakraborty on 12:25 PM Rating: 5

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